Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance

its growth with a case study of B .S.N.L., a telecom service provider of India University Centre Address InfoTech, University Study Centre (Sikkim Manipal University), 3/7, Central Park , City Centre, Durgapur-713216, West Bengal. Centre Code 0249 Title of the project report Descriptive qualitative approach towards the financing needs of Indian telecom se ctor and different innovative ways to finance its growth with a case study of B. S.N.L., a telecom service provider of India. By- Neeraj Kumar Singh (Roll No-520751161) A project report submitted in partial fulfillment of the requirements for the de gree of Master of Business Administration of Sikkim Manipal University, India. Sikkim-Manipal university of Health, Medical and technological sciences, Distanc e education wing, Syndicate house, Manipal-576104. -1By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Project Synopsis Title Descriptive qualitative approach towards the financing needs of Indian telecom se ctor and different innovative ways to finance its growth with a case study of B. S.N.L., a telecom service provider in India. Objectives The objective of the project can be summarized as follows1) The first objective is to access the Indian telecom sector, its current status & structure, its appe llate authority, its telecom policies, service offerings, investment opportuniti es & incentives, research & development works, growth potential, government visi on and mission etc. 2) The second objective is to find out the socio-economic im pact of telecommunication investment in developing countries like India, the eff ect of information and communication technologies, the digital divide in develop ing and developed nations. 3) The third objective is to find out different finan cing strategies and financial ways to finance a telecom projects in India, and t o access the different financial risks associated with. 4) The fourth objective is to establish the relation between the telecom investment and its effect on th e growth in global perspective. 5) The fifth objective is to take the case of B. S.N.L. ( A govt. of India enterprise), a telecom service provider, to access its current business structure, service offerings, current growth in terms of reven ue and profits, service expansions, its asset structure, social commitment. 6) T he sixth objective is to find out the telecom trends in global perspective, high growth drivers, business patterns, cost efficient operation, and how to expand in low ARPU Rural markets. 7) The seventh objective is to see the picture of pub lic-private partnership contribution in telecom growth in India, their investmen t pattern and their differential contribution to the telecom growth. 8) The eigh th objective is to look into the telecom investment opportunities and potential in Indian telecom sector and the public private investment avenues and nodal age ncies. 9) At last, to bring out the conclusion for financing needs of telecom se ctors, their socio-economic effects, find out the viable technological options t o grow in rural telephony, proving the purpose of people's growth, analyzing the g lobal telecom growth and public private contributions, observing the chunk of in vestment required to revolutionize the growth, in developing nations like India. -2By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Methodology To fulfill the objective of the project, different research methodologies have b een used to come on the conclusions. Mainly descriptive study has been made to k eep the research simple and narrative and some time quantitative and mainly qual itative approaches have been made to the subject. Mainly secondary data which ha ve been collected from different websites, magazine, research papers, interactio ns and books, have been used for analysis purpose. Different case studies have b een taken in to consideration to bring out some facts. Company financials availa ble in public domains have been compared and telecommunication papers available on websites of ministry of finance, D.O.T., and TRAI have been looked up. Some s urveys of telecom vendors in India, have also been taken into consideration to p ull out the conclusions on the subject. -3By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Acknowledgement I am very much thankful to the people who have helped me in preparation of this project, directly or indirectly. I would like to give special thanks to Mr. Srik anta Ghosh, faculty at Sikkim Manipal University study centre, Durgapur, who has given me the opportunities to do this project. I am very much grateful to Mr. D. Rana, D.E. (Admin), B.S.N.L., Durgapur, Mr. N. Chakraborty, S.D.E. / Panagarh & B.B., B.S.N.L., Durgapur for their endeavor su pport for completing this project. I am thankful to my friends giving their rema rkable contribution and special thanks to Mr. Srikanta Ghosh, who not only expla ined the topics very well but has thrown the light on the practical aspect of th e project too. (Neeraj Kumar Singh) -4By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India

Table of Content 1. Executive Summary of the Project 7 2. Bharat Sanchar Nigam Limited of BSNL .12 2.4 Staff 13 2.5 Finance forms ...36 4.2 Pre-reform Period and Telecommunication in India since early 1990's ...39 5. Why Telecom Investment and Expansion?? .................. ..........................................................47 5.1 Traditional met hods of financing telecommunication in developing countries .......47 5.2 Investin g in telecommunication projects a multiplication effect? ....................... ........49 5.3 What is Information and Communications Technology? .............. .................................50 5.4 The Digital Divide ..51 6. g? ............................................................................. .......59 6.1 What is financial engineering? ................................... ......................................................59 6.2 Financing Strategie s..61 6.3 Financing ways 65 6.4 Financi telecommunication for economic growth .80 7. B.S.N.L. as a Telecom Service Provide ed telecom service provider ...85 7.2 Growth Plan statement .96 8. Telecom Trends and High Growth Drivers and rural telecom infrastructure convergence 105 9.1 Optimised network operations work utilization...108 9.3 Shared access is a bridge to personal connectiv to top 13 million by 2013 111 -5By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India

10. The Role of Public & Private Players in Indian Telecom Sector113 10.1 Airtel e telecom service provider115 10.2 Performance parameters of BSNL ial In India .129 11.1 Opportunities ...129 11.2 Po s 137 13.4 Enter WiMAX 138 13.5 Looking ns, and Recommendations .146 15. References stry ..178 17.5 Tele-density Picture in India ..179 1 t Commitments to Infrastructure Projects .188 17.8 Auditor General of India Report o n Outstanding Billed Amount in Telecom ...189 -6By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-1 Executive Summary of the Project India has taken positive steps towards liberalizing the telecommunications marke t and introducing private investment and competition in basic telecommunications services. Foreign equity in value-added services is limited to 51 percent. For basic services, the limit is 49 percent as it has been difficult to raise the am ounts of money needed to finance the new networks, creative financing arrangemen ts have been allowed in some cases that extend the limit to 74 percent. The Indi an Telecommunications network with 353 million connections (as on September 2008 ) is the third largest in the world. The sector is growing at a speed of 46-50% during the recent years. NTP-99 laid down a clear roadmap for future reforms, co ntemplating the opening up of all the segments of the telecom sector for private sector participation. The Government is committed to expanding rural connectivi ty through a slew of measures so that rural users can access information of valu e and transact business. This will include connecting block headquarters with fi ber optic network, using wireless technology to achieve last mile connectivity a nd operating information kiosks through a partnership of citizens, panchayats, c ivil society organizations, the private sector and Government. Telecommunication plays a central role in helping developing countries participate in the global economy. Telecommunication is pervasive in all aspects of our lives, from the st ereo in your living room to the mobile phone you carry with you. These technolog ical innovations we have in our lives are often taken for granted and it is unfe asible for us to imagine how we can function without them. By encouraging the es tablishment of telecommunication industries within their countries, not only is their GNP boosted from the production of higher value-added goods, but also, the economy can progress to that which is predominantly characterized by secondary or tertiary industries Usually financial engineering are used to reduce the fina ncial risk, a second thing is to restructure cash flows for better financial man agement. Because financial engineering are used to finance projects it can be us ed to finance telecom projects around the world, and especially in India. This k ind of infrastructure project is according to Merna & Njiru (2002) important in developing countries because they are in need for that. Infrastructure projects in developing countries bring several improvements of the country, they lead to: Human welfare and economic development. Reduction of poverty. The environment w ill be improved. A well spread out telecommunication network provides a great imp etus to the economic growth in a country. Considering the significance of its co ntribution and also the need to integrate with the global economy, several polic y initiatives have been taken by the government. (Ministry of Finance, Govt. of I ndia, 2004-11-26) -7By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India To understand the telecom sector growth, it is needed to analyze the giant compa nies working in telecom sector. The health of these companies tells the story of operating environment of Indian telecom industry. Bharat Sanchar Nigam Limited, a government of India enterprise, formed on 1st October-2000, from its parent b ody Department of Telecom ( DOT ) working under ministry of telecommunication, I ndia, is playing a major role in India's telecom arena. When B.S.N.L. formed, the growth of telecom in India was very much dismal, great challenges were before th e government to fire the telecommunication growth, pacing the structural growth of India. So, corporatization of DOT done. New entity, B.S.N.L, got more indepen dence, made professional approach in its growth keeping the mission of governmen t's social view, and maintaining its financial health. It has been expanded into d ifferent kind of telecom fields and being competitive with others private player s in the sector. Because it is wholly owned by government, it can be said to be the government purpose vehicle, to regulate the Indian telecom industry, fulfill ing the purpose of socio-economic development of India. The exploded growth in I ndian telecom industry after telecom reforms has shown at the one side a tremend ous telecom infrastructure growth both by B.S.N.L. and other private players, bu t at the other side, fierce competition between these operators, has shrank the margins of operation. At the one side where Indian people have got improved and diverse services at better prices, the financial health of these companies have been affected. Here, we have taken the case of B.S.N.L, and analyzed its busines s operations, its financial needs, growth areas, non-profitable operations, in t he perspective of Indian telecom sector as a whole. The growth figure of Airtel has been seen and analyzed the contribution of private players in telecom growth in India. Now different technologies and market efficient technologies are avai lable. Their social impact has been viewed and trend in telecom evolution has be en considered to make the viable investment. The telecommunication markets are e volving all over the world very rapidly and day by day a new technology is comin g to rock the bourses but at some cost. The time span of these technologies are very less, and before implementing the options available, the company should ana lyze its commercial aspect, and should try implementing the project of lesser br eak-even time. In this competitive era, you can't get the chance to be left out in implementing the new technology, in spite of how much it cost to your exchequer . New technology in telecom brings the new dimension of businesses, and new refo rm in social arena, so it is indispensable for the country's growth. All developme nt, expansion, growth need financing. How these financing can be arranged. Diffe rent kinds of innovative ways of financing are available and which will be suite d best, it should be analyzed case by case basis, so that financing needs may be fulfilled and growth can be intact. -8By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-2 2.1 Introduction Bharat Sanchar Nigam Limited (Company Profile) Bharat Sanchar Nigam Ltd. formed in October, 2000, is Worlds 7th largest teleco mmunications company providing comprehensive range of telecom services in India like Wireline, CDMA mobile, GSM Mobile, Internet, Broadband, Carrier service, MP LS-VPN, VSAT, VoIP services, IN Services etc. Within a span of five years it has become one of the largest public sector unit in India. BSNL has installed quality telecom network in the country and now focusing on im proving it, expanding the network, introducing new telecom services with ICT app lications in villages and wining customers confidence. Today, it has about 46.1 88 million basic line telephone capacity, 7.96 million WLL capacity, 45.288 mill ion GSM Capacity, 4.854million internet capacity, 5.807 million broadband capaci ty, more than 37382 fixed exchanges, 60000 BTS, 287 Satellite Stations, 480196 R km of OFC Cable, 63730 Rkm of Microwave Network connecting 602 Districts, 7330 c ities/towns and 5.5 Lakhs villages. BSNL is the only service provider, making focused efforts and planned initiative s to bridge the RuralUrban Digital Divide ICT sector. In fact there is no teleco m operator in the country to beat its reach with its wide network giving service s in every nook & corner of country and operates across India except Delhi & Mum bai. Whether it is inaccessible areas of Siachen glacier and North-eastern regio n of the country. BSNL serves its customers with its wide bouquet of telecom ser vices. BSNL is numero uno operator of India in all services in its license area. The co mpany offers vide ranging & most transparent tariff schemes designed to suite ev ery customer. BSNL cellular service, CellOne, has more than 46.732 million cellu lar customers as on March-2009, garnering 16.19 percent of all mobile users as i ts subscribers. In basic services, BSNL is miles ahead of its rivals, with 29.34 6 million Basic Phone subscribers i.e. 85 per cent share of the subscriber base and 92 percent share in revenue terms. -9By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India BSNL has more than 5.436 million WLL subscribers and 3.693 million Internet Cust omers who access Internet through various modes viz. Dial-up, Leased Line, DIAS, Account Less Internet(CLI). BSNL has been adjudged as the NUMBER ONE ISP in the country. BSNL has set up a world class multi-gigabit, multi-protocol convergent IP infras tructure that provides convergent services like voice, data and video through th e same Backbone and Broadband Access Network. At present there are 3.557 million DataOne broadband customers and 5.807 million equipped capacity at the end of M arch-2009. The company has vast experience in Planning, Installation, network in tegration and Maintenance of Switching & Transmission Networks and also has a wo rld class ISO 9000 certified Telecom Training Institute. Scaling new heights of success, the present turnover of BSNL is more than Rs.351 ,820 million (US $ 8 billion) with net profit to the tune of Rs.99,390 million ( US $ 2.26 billion) for financial year 200607. The infrastructure asset on teleph one alone is worth about Rs.630,000 million (US $ 14.37 billion). BSNL plans to expand its customer base from present 47 millions lines to 125 mil lion lines by December 2007 and infrastructure investment plan to the tune of Rs .733 crores (US$ 16.67 million) in the next three years. The turnover, nationwide coverage, reach, comprehensive range of telecom service s and the desire to excel has made BSNL the No. 1 Telecom Company of India. - 10 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 2.2 Vision, Mission & Objectives 2.2.1 VISION To become the largest telecom Service Provider in Asia. 2.2.2 MISSION i. ii. To provide world class State-of-art technology telecom services to its cu stomers on demand at competitive prices. To Provide world class telecom infrastr ucture in its area of operation and to contribute to the growth of the countrys economy. 2.2.3 OBJECTIVES To be the Lead Telecom Services Provider. To provide quality and reliable fixed telecom service to our customer and there by increase customers confidence. To provide mobile telephone service of high quality and become no. 1 GSM operator i n its area of operation. To provide point of interconnection to other service pr ovider as per their requirement promptly. To facilitate R & D activity in the co untry. Contribute towards: i. National Plan Target of 500 million subscriber bas e for India by 2010. ii. Broadband customers base of 20 million in India by 2010 as per Broadband Policy 2004. iii. Providing telephone connection in villages a s per government policy. iv. Implementation of Triple play as a regular commerci al proposition.

- 11 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 2.3 Organization Chart of BSNL - 12 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 2.4 Staff Distribution of Group-wise staff strength of DoT and BSNL (numbers) as on 31st M arch 2007 is indicated below: - 13 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 2.5 Finance Bharat Sanchar Nigam Limited, the largest Public Sector Undertaking of the Natio n, is certainly on a financial ground thats sound. The Company has a net worth of Rs. 88,128 crores (US$ 22.02 billion), authorised equity capital of Rs. 10,00 0 crores (US $ 2.50 billion), Paid up Equity Share Capital of Rs. 5,000 crores ( US $ 1.25 billion) and Revenues is Rs. 38053 crores (US $ 9.51 billion) in 200708. (Note: 1 US $ = 40.02 INR as on 31-03-2008) 2.5.1 Gross Investment in Fixed Assets The BSNL is making substancial investment year to year for its network expension and mordenisation. During the current financial year BSNL has made the gross in vestment of Rs. 7180 crore ( US $ 1.79 billion) in Fixed Assets. These investmen ts have been financed by the internal accruals. 2.5.2 Cumulative Capital Outlay BSNL has Gross Fixed Assets of over Rs. 124578 Crores (US $ 31.13 billion) as on 31.03.2008. - 14 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-3 Indian Telecom Sector at a Glance The telecom services have been recognized the world-over as an important tool fo r socio-economic development for a nation. It is one of the prime support servic es needed for rapid growth and modernization of various sectors of the economy. Indian telecommunication sector has undergone a major process of transformation through significant policy reforms, particularly beginning with the announcement of NTP 1994 and was subsequently re-emphasized and carried forward under NTP 19 99. Driven by various policy initiatives, the Indian telecom sector witnessed a complete transformation in the last decade. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future also. 3.1 Status of Telecom Sector The Indian Telecommunications network with 353 million connections (as on Setemb er 2008) is the third largest in the world. The sector is growing at a speed of 46-50% during the recent years. This rapid growth is possible due to various pro active and positive decisions of the Government and contribution of both by the public and the private sectors. The rapid strides in the telecom sector have bee n facilitated by liberal policies of the Government that provides easy market ac cess for telecom equipment and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices. 3.1.1 Telecom Regulatory Authority of India (TRAI) The entry of private service providers brought with it the inevitable need for i ndependent regulation. The Telecom Regulatory Authority of India (TRAI) was, thu s, established with effect from 20th February 1997 by an Act of Parliament, call ed the Telecom Regulatory Authority of India Act, 1997, to regulate telecom serv ices, including fixation/revision of tariffs for telecom services which were ear lier vested in the Central Government. - 15 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India TRAI's mission is to create and nurture conditions for growth of telecommunication s in the country in manner and at a pace, which will enable India to play a lead ing role in emerging global information society. One of the main objectives of T RAI is to provide a fair and transparent policy environment, which promotes a le vel playing field and facilitates fair competition. In pursuance of above object ive TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it and provided the required direct ion to the evolution of Indian telecom market from a Government owned monopoly t o a multi operator multi service open competitive market. The directions, orders and regulations issued cover a wide range of subjects including tariff, interco nnection and quality of service as well as governance of the Authority. The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take ov er the adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudi cate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose of appeals against any direction, decision or order of TRAI. 3.1.2 New Telecom Policy 1999 The most important milestone and instrument of telecom reforms in India is the N ew Telecom Policy 1999 (NTP 99). The New Telecom Policy, 1999 (NTP-99) was appro ved on 26th March 1999, to become effective from 1st April 1999. NTP-99 laid dow n a clear roadmap for future reforms, contemplating the opening up of all the se gments of the telecom sector for private sector participation. It clearly recogn ized the need for strengthening the regulatory regime as well as restructuring t he departmental telecom services to that of a public sector corporation so as to separate the licensing and policy functions of the Government from that of bein g an operator. It also recognized the need for resolving the prevailing problems faced by the operators so as to restore their confidence and improve the invest ment climate. - 16 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Key features of the NTP 99 include: Strengthening of Regulator. National long di stance services opened to private operators. International Long Distance Service s opened to private sectors. Private telecom operators licensed on a revenue sha ring basis, plus a one-time entry fee. Resolution of problems of existing operat ors envisaged. Direct interconnectivity and sharing of network with other teleco m operators within the service area was permitted. Department of Telecommunicati on Services (DTS) corporatised in 2001. Spectrum Management made transparent and more efficient. All the commitments made under NTP 99 have been fulfilled, each one of them, in letter and spirit, some even ahead of schedule, and the reform process is now co mplete with all the sectors in telecommunications opened for private competition . 3.1.3 National Long Distance National Long Distance opened for private participation. The Government announce d on 13.08.2000 the guidelines for entry of private sector in National Long Dist ance Services without any restriction on the number of operators. The DOT guidel ines of license for the National Long Distance operations were also issued. - 17 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Highlights - NLD Guidelines Unlimited entry for carrying both inter-circle and intra-circle calls. Total for eign equity (including equity of NRIs and international funding agencies) must n ot exceed 74%. Promoters must have a combined net worth of Rs.25 million. Private operators will have to enter into an arrangement with fixed-service prov iders within a circle for traffic between long-distance and short-distance charg ing centers. Seven years time frame set for rollout of network, spread over four phases. Any shortfall in network coverage would result in encashment and forfeiture of bank guarantee of that phase. Private operators to pay one-time entry fee of Rs.25 million plus a Financial Ba nk Guarantee (FBG) of Rs.200 million. The revenue sharing agreement would be to the extent of 6%. Private operators allowed to set up landing facilities that access submarine cab les and use excess bandwidth available. Licence period would be for 20 years and extendable by 10 years. 3.1.4 International Long Distance In the field of international telephony, India had agreed under the GATS to revi ew its opening up in 2004. However, open competition in this sector was allowed with effect from April 2002 itself. There is now no limit on the number of servi ce providers in this sector. The licence for ILD service is issued initially for a period of 20 years, with automatic extension of the licence by a period of 5 years. The applicant company pays one-time non-refundable entry fee of Rs.25 mil lion plus a bank guarantee of Rs.250 million, which will be released on fulfillm ent of the roll out obligations. The annual licence fee including USO contributi on is @ 6% of the Adjusted Gross Revenue and the fee/royalty for the use of - 18 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India spectrum and possession of wireless telegraphy equipment are payable separately. At present 10 ILD service providers (9 Private and 1 Public Sector Undertaking) are there. As per current roll out obligations under ILD license, the licensee undertakes to fulfill the minimum network roll out obligations for installing at least one Gateway Switch having appropriate interconnections with at least one National Long Distance service licensee. There is no bar in setting up of Point of Presence (PoP) or Gateway switches in remaining location of Level I Tax's. Pref erably, these PoPs should conform to Open Network Architecture (ONA) i.e. should be based on internationally accepted standards to ensure seamless working with other Carrier's Network. 3.1.5 Universal Service Obligation Fund Another major step was to set up the Universal Service Obligation Fund with effe ct from April 1, 2002. An administrator was appointed for this purpose. Subseque ntly, the Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed by both Houses of Parliament in December 2003. The Fund is to be utilized exclusively for meeting the Univer sal Service Obligation and the balance to the credit of the Fund will not lapse at the end of the financial year. Credits to the Fund shall be through Parliamen tary approvals. The Rules for administration of the Fund known as Indian Telegra ph (Amendment) Rules, 2004 were notified on 26.03.2004. The resources for implem entation of USO are raised through a Universal Service Levy (USL) which has pres ently been fixed at 5% of the Adjusted Gross Revenue (AGR) of all Telecom Servic e Providers except the pure value added service providers like Internet, Voice M ail, E-Mail service providers etc. In addition, the Central Govt. may also give grants and loans. An Ordinance was promulgated on 30.10.2006 as the Indian Teleg raph (Amendment) Ordinance 2006 to amend the Indian Telegraph Act, 1885 in order to enable support for mobile services and broadband connectivity in rural and r emote areas of the country. Subsequently, an Act has been passed on 29.12.2006 a s the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1 885. - 19 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.1.6 Unified Access Services Unified access license regime was introduced in November'2003. Unified Access Serv ices operators are free to provide, within their area of operation, services, wh ich cover collection, carriage, transmission and delivery of voice and/or non-vo ice messages over Licensee's network by deploying circuit, and/or packet switched equipment. Further, the Licensee can also provide Voice Mail, Audiotex services, Video Conferencing, Videotex, E-Mail, Closed User Group (CUG) as Value Added Se rvices over its network to the subscribers falling within its service area on no n-discriminatory basis. The country is divided into 23 Service Areas consisting of 19 Telecom Circle and 4 Metro Service Areas for providing Unified Access Serv ices (UAS). The licence for Unified Access Services is issued on nonexclusive ba sis, for a period of 20 years, extendable by 10 years at one time within the ter ritorial jurisdiction of a licensed Service Area. The licence Fee is 10%, 8% & 6 % of Adjusted Gross Revenue (AGR) for Metro and Category `A', Category `B' and Categ ory `C' Service Areas, respectively. Revenue and the fee/royalty for the use of sp ectrum and possession of wireless telegraphy equipment are payable separately. T he frequencies are assigned by WPC wing of the Department of Telecommunications from the frequency bands earmarked in the applicable National Frequency Allocation Plan and in coordination with various users subject to ava ilability of scarce spectrum. At present 3 to 6 service providers (2-5 Private a nd 1 Public Sector Undertaking) are there in most of the service areas. 3.1.7 Internet Service Providers (ISPs) Internet service was opened for private participation in 1998 with a view to enc ourage growth of Internet and increase its penetration. The sector has seen trem endous technological advancement for a period of time and has necessitated takin g steps to facilitate technological ingenuity and provision of various services. The Government in the public interest in general, and consumer interest in part icular, and for proper conduct of telegraph and telecom services has decided to issue the new guidelines for grant of license of Internet services on non-exclus ive basis. Any Indian company with a maximum foreign equity of 74% is eligible f or grant of license. - 20 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.1.8 Interconnection Usage Charges In January 2003, TRAI notified the Interconnection Usage Charges (IUC) Regulatio n, 2003 and issued the same in October 2003, which covered arrangements amongst service providers for payment of IUC, covering Basic Services, including Wireles s-in-Local Loop (Mobile), Cellular Mobile Services, National Long Distance (NLD) and International Long Distance (ILD) services. This regulation provided for ch arges payable by one operator to another for origination, transit and terminatio n of calls in a multioperator environment. It came into force with effect from 1 February 2004. The main features of the new IUC regime were lower Access Defici t Charges (ADC), uniform termination charges of Rs 0.30 per minute irrespective of the terminating network, reduction of ADC on NLD and ILD calls, all of which resulted in lower tariff environment on voice telephony. 3.1.9 Broadband Policy 2004 Recognizing the potential of ubiquitous Broadband service in growth of GDP and e nhancement in quality of life through societal applications including tele-educa tion, tele-medicine, e-governance, entertainment as well as employment generatio n by way of high-speed access to information and web based communication; Govern ment has announced Broadband Policy in October 2004. The main emphasis is on the creation of infrastructure through various technologies that can contribute to the growth of broadband services. These technologies include optical fibre, Asym metric Digital Subscriber Lines (ADSL), cable TV network; DTH etc. Broadband con nectivity has been defined as Always On with the minimum speed of 256 kbps. It is estimated that the number of broadband subscribers would be 9 million by 2007 a nd 20 million by 2010. With a view to encourage Broadband Connectivity, both out door and indoor usage of low power Wi-Fi and Wi-Max systems in 2.4 GHz-2.4835 GH z band has been delicensed. The use of low power indoor systems in 5.15-5.35 GHz and 5.725-5.875 GHz bands has also been delicensed in January 05. The SACFA/WPC clearance has been simplified. The setting up of National Internet Exchange of India (NIXI) would enable bringing down the international bandwidth cost substan tially, thus making the broadband connectivity more affordable. - 21 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India The prime consideration guiding the Policy includes affordability and reliabilit y of Broadband services, incentives for creation of additional infrastructure, e mployment opportunities, induction of latest technologies, national security and bring in competitive environment so as to reduce regulatory interventions. By t his new policy, the Government intends to make available transponder capacity fo r VSAT services at competitive rates after taking into consideration the securit y requirements. The service providers permitted to enter into franchisee agreeme nt with cable TV network operators. However, the Licensee shall be responsible f or compliance of the terms and conditions of the licence. Further in the case of DTH services, the service providers permitted to provide Receive-Only-Internet Service. The role of other facilitators such as electricity authorities, Departm ents of ITs of various State Governments, Departments of Local Self Governments, Panchayats, Departments of Health and Family Welfare, Departments of Education is very important to carry the advantage of broadband services to the users part icularly in rural areas. The Year 2007 was declared the year of broadband. Targe t has been set for 20 million broadband connections by 2010 and providing Broadb and connectivity to all secondary and higher secondary schools, public health in stitutions and panchayats by 2008. In rural areas, connectivity of 512 KBPS with ADSL 2 plus technology (on wire) will be provided from about 20,000 existing ex changes in rural areas having optical fibre connectivity. Community Service Cent res, secondary schools, banks, health centres, Panchayats, police stations etc. can be provided with this connectivity in the vicinity of above-mentioned 20,000 exchanges in rural areas. DOT will be subsidizing the infrastructure cost of Br oadband network through support from USO Fund to ensure that Broadband services are available to users at affordable tariffs. - 22 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.1.10 Tariff Changes The Indian Telecom Sector has witnessed major changes in the tariff structure. T he Telecommunication Tariff Order (TTO) 1999, issued by regulator (TRAI), had be gun the process of tariff balancing with a view to bring them closer to the cost s. This supplemented by Calling Party Pay (CPP), reduction in ADC and the increa sed competition, has resulted in a dramatic fall in the tariffs. The peak National Long Distance tariff for above 1000 Kms. in 2000 has come down from US$ 0.67 per minute to US$ 0.02 per minute in 2006. The International Long Distance tariff from US$ 1.36 per minute in 2000 to US$ 0.16 per minute in 2004 for USA, Canada & UK. The mobile tariff for local calls has reduced from US $0.36 per minute in 1999 to US$ 0.009 - US$ 0.04 per minute in 2006. The Average Revenue Per User of mobile is between US$ 5 .06 - US$ 7.82 per month - 23 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.1.11 Foreign Direct Investment (FDI) In Basic, Cellular Mobile, Paging and Value Added Service, and Global Mobile Per sonal Communications by Satellite, Composite FDI permitted is 74% (49% under aut omatic route) subject to grant of license from Department of Telecommunications and adherence by the companies (who are investing and the companies in which inv estment is being made) to the license conditions for foreign equity cap and lock in period for transfer and addition of equity and other license provision. (Pre ss Note 3(2007)) Foreign direct investment upto 74% permitted, subject to licens ing and security requirements for the following: Radio Paging Service FDI upto 100% permitted in respect of the following telecom services: Infrastruc ture Providers providing dark fibre (IP Category I); Electronic Mail; and Voice Mail The above would be subject to the following conditions: FDI upto 100% is allowed subject to the conditions that such companies would divest 26% of their equity in favor of Indian public in 5 years, if these companies were listed in o ther parts of the world. The above services would be subject to licensing and se curity requirements, wherever required. Proposals for FDI beyond 49% shall be co nsidered by FIPB on case-to-case basis. In manufacturing sector 100% FDI is permitted under automatic route. - 24 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.1.12 Investment Opportunities and Incentives An attractive trade and investment policy and lucrative incentives for foreign c ollaborations have made India one of the world's most attractive markets for the t elecom equipment suppliers and service providers. No industrial license required for setting up manufacturing units for telecom equipment. Automatic approval of 100 percent foreign equity, technology fee up to US $ 2 million, royalty up to 5 percent for domestic sales and 8 percent for exports in telecom manufacturing projects. Foreign equity of 74%(49 % under automatic route) permitted for teleco m services - basic, cellular mobile, paging, value added services - and global m obile personal communications by satellite. Telecom services projects extended number of incentives: Amortization of license fee Tax holiday Enhanced limit of external commercial borrowings Rebate on subscription to shares/debentures. Sco pe for tax exemption on financing through venture capital Concessional import du ties for import of equipment by telecom service projects (including cellular, basic, internet etc.) Full repatriability of dividend income and capital investe d in the telecom sector. - 25 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.1.13 Network Expansion The telecom sector has shown robust growth during the past few years. It has als o undergone a substantial change in terms of mobile versus fixed phones and publ ic versus private participation. The following table shows the growth trend of t elecom sector from last five years: The number of telephones has increased from 54.63 million as on 31.03.2003 to 353.66 million as on 30.09.2008. Wireless subs cribers increased from 13.3 million as on 31.03.2003 to 315.31million as on 30.0 9.2008. Whereas, the fixed line subscribers decreased from 41.33 million in 31.0 3.2003 to 38.35 million in 30.09.2008. The broadband subscribers grew from a mea ger 0.18 million to 4.91 million during the last 4 years. 3.1.14 Trend in Tele-density Tele-density in the country increased from 5.11% in 2003 to 30.64 % in September 2008 i.e. an incremental growth of 34.15 % during last 5 years (about 7% per an num). In the rural area teledensity increased from 1.49% in Mar 2003 to approx. 11.5% in September 2008 and in the urban areas it is increased from 14.32% in Ma r 2003 to 75.76% in september 2008.This indicates a rising trend of Indian telec om subscribers. 3.1.15 Rural Telephony Apart from the 76.65 million fixed and WLL connections (as on Sep. 2008) provide d in the rural areas, 551064 VPTs have been provided. Thus, 92% of the villages in India have been covered by the VPTs. More than 2 lakh PCOs are also providing community access in the rural areas. Further, Mobile Gramin Sanchar Sewak Schem e (GSS) a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043 villages. Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks) have been provided in more th an 3500 Block Headquarters out of the total 6337 Blocks in the country. The targ et of 80 million rural connection by 2010 will be met during - 26 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India year 2008 itself. USO subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 18,000 towers by 2010. 3.1.16 Opportunities India offers an unprecedented opportunity for telecom service operators, infrast ructure vendors, manufacturers and associated services companies. A host of fact ors are contributing to enlarged opportunities for growth and investment in tele com sector: An expanding Indian economy with increased focus on the services sec tor Population mix moving favorably towards a younger age profile Urbanization w ith increasing incomes Investors can look to capture the gains of the Indian telecom boom and diversify their operations outside developed economies that are marked by saturated telec om markets and lower GDP growth rates. Inflow of FDI into India's telecom sector d uring Jan 1991 to August 2008 was about Rs 233,344 million. Also, more than 6 pe r cent of the approved FDI in the country is related to the telecom sector. 3.1.17 Research & Development India has proven its dominance as a technology solution provider. Efforts are be ing continuously made to develop affordable technology for masses, as also compr ehensive security infrastructure for telecom network. Research is on for the pre paration of tested infrastructure for enabling interoperability in Next Generati on Network. It is expected that the telecom equipment R & D shall be doubled by 2010 from present level of 15%. Modern technologies inductions are being promote d. Pilot projects on the existing and emerging technologies have been undertaken including WiMax, 3G etc. Emphasis is being given to technologies having potenti al to improve rural connectivity. 3G and Broadband Wireless Access(BWA) policies has since been issued. Also to beef up R&D infrastructure in the telecom sector and bridge the - 27 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India digital divide, cellular operators, top academic institutes and the Government o f India together set up the Telecom Centres of Excellence (COEs). The main objec tives of the COEs are as follows: Achieve Telecom Vision 2010 that stipulates a definite growth model and take it beyond. Secure Information Infrastructure that is vital for country's security. Ca pacity Building through Knowledge for a sustained growth. Support Planned Predic tive Growth for stability. Reduce Rural Urban Digital Divide to reach out to mas ses. Utilize available talent pool and create environment for innovation. Manage ment of National Information Infrastructure (NII) during Disaster Cater the requ irement of South East Asia as Regional Telecom Leader - 28 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.2 Targets Set By The Government 3.2.1 Network expansion 500 million connections by the year 2010. Provision of mobile coverage of 90% ge ographical area by 2010. 3.2.2 Rural telephony One phone per two rural households by 2010 (about 80 million rural connections). Reduce urban-rural digital divide from present 25:1 to 5:1 by 2010. 3.2.3 Broadband Broadband with minimum speed of 1 mbps. Broadband coverage for all secondary & h igher secondary schools and public health care centres by the end of year 2008. Broadband coverage for all Gram panchayats by the year 2010 3.2.4 Infrastructure Sharing USO subsidy support scheme for shared wireless infrastructure in rural areas wit h about 18,000 towers by 2010. Increase sharing in urban areas to 70% by 2010. 3.2.5 Introduction of Spread of IPTV and Mobile TV IPTV in 600 towns by 2010. - 29 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.2.6 Manufacturing Making India a hub for telecom manufacturing by facilitating more and more telec om specific SEZs. Quadrupling production in 2010. Achieving exports of 6 times f rom present level of 0.5 billion in 2010. 3.2.7 Research & Development Pre-eminence of India as a technology solution provider. Comprehensive security infrastructure for telecom network. Tested infrastructure for enabling interoper ability in Next Generation Network. Doubling the telecom equipment R&D by 2010 f rom present level of 15%. 3.2.8 International Bandwidth Facilitating availability of adequate international bandwidth at competitive pri ces to drive ITES sector at faster growth. - 30 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.3 Indian Telecommunications at a glance (As on 30th September 2008) Rank in world in network size Teledensity (per hundred populations) Telephone con nection (In million) Fixed Mobile Total Village Public Telephones 3rd 30.64 38.35 315.31 353.66 5.6 lakh Foreign Direct Investment (in million) (from 182042 January 2000 till August 200 8) Licenses issued Basic CMTS UAS Infrastructure Provider I ISP (Internet) ISP w ith Telephony (Broadband) National Long distance International Long Distance 2 6 0 224 177 382 125 24 19 million - 31 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.4 Bharat Nirman A time-bound plan for rural infrastructure by the Government of India in partner ship with State Governments and Panchayat Raj Institutions 2005-2009. Bharat Nirm an will be a time-bound business plan for action in rural infrastructure for the next four years. Under Bharat Nirman, action is proposed in the areas of irriga tion, road, rural housing, rural water supply, rural electrification and rural t elecommunication connectivity. We have set specific targets to be achieved under each of these goals so that there is accountability in the progress of this ini tiative. - Dr. Manmohan Singh Prime Minister Goal: Every village to be connected by telephone: remaining 66,822 villages to be covered by November 2007 The Depar tment of Telecom in the Ministry of Communications and Information Technology ha s the responsibility of providing telephone connectivity to the 66,822 villages that remain to be covered. 3.4.1 Funds The resources for implementation of universal services obligation are raised thr ough a Universal Service Levy which has presently been fixed at 5% of the adjust ed gross revenue of all telecom service providers except the pure value added se rvice providers like internet, voice mail, e-mail service providers. The rules a lso make a provision for the Central Government to give grants and loans to the Fund. The balance to the credit of the Fund does not lapse at the end of the fin ancial year. USO Fund assigns the task of providing VPTs on the basis of bids th rough open tender and in this case the work has been assigned to Bharat Sanchar Nigam Ltd. Out of the 66,822 villages identified, connectivity in 14,183 remote and far-flung villages will be provided through digital satellite phone terminal s. From the USOF, assistance is provided for both capital expenditure as well as operational expenditure. It is estimated that a total sum of Rs.451 crore would be required to provide VPTs in these 66,822 villages and the entire sum will be met out of USOF and no separate allocation from Government would be required. - 32 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3.4.2 Additional Incentives Telecom service providers are being assisted through the USOF to penetrate into the rural areas for the following activities: - Maintenance of existing village public telephones (VPTs). - Provision of an additional rural community phone in villages with a population of more than two thousand and where no public call of fice exists. - Replacement of village public telephones installed on Multi Acces s Radio Relay (MARR) technology. - Telephone lines installed in household in spe cified rural areas. 3.4.3 Increasing Rural Teledensity Rural teledensity will be significiantly enhanced during the period of Bharat Ni rman. 3.4.4 Knowledge Connectivity The Government is committed to expanding rural connectivity through a slew of me asures so that rural users can access information of value and transact business . This will include connecting block headquarters with fibre optic network, usin g wireless technology to achieve last mile connectivity and operating informatio n kiosks through a partnership of citizens, panchayats, civil society organizati ons, the private sector and Government. - 33 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-4 Institutional History Of The Telecom sector in India The telegraph act of 1885 governed the telecommunications sector. Under this act , the government was in-charge of policymaking and provision of services . Major changes in telecommunications in India began in the 1980s. Under the Seventh Pl an (1985-90), 3.6 percent of total outlay was set aside for communications and s ince 1991, more than 5.5 percent is spent on it (Figure 1). The initial phase of telecom reforms began in 1984 with the creation of Center for Department of Tel ematics (C-DOT) for developing indigenous technologies and private manufacturing of customer premise equipment. Soon after, the Mahanagar Telephone Nigam Limite d (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were set up in 1986. The Teleco m Commission was established in 1989. When telecom reforms were initiated in 199 4, there were three incumbents in the fixed service sector, namely DoT (Departme nt of Telecom), MTNL and VSNL. Of these, DoT operated in all parts of the countr y except Delhi and Mumbai. MTNL operated in Delhi and Mumbai and VSNL provided i nternational telephony. Given its all-India presence and policy-making powers, t he DoT enjoyed a monopoly in the telecom sector prior to the major telecom refor ms. However, subsequent to the second phase of reforms in 1999, which included r estructuring the DoT to ensure a level playing field among private operators and the incumbent, the service-providing sector of DoT was split up and called Depa rtment of Telecom Services (DTS). DTS was later corporatized and renamed Bharat Sanchar Nigam Limited (BSNL). This meant separation of the incumbent service pro vider from the policy-maker. Broadly, DoT is now responsible for policy-making, licensing and promotion of private investments in both telecom equipment and man ufacture and provision of telecom services. BSNL, a corporate body, is responsib le for the provision of services. A crucial aspect of the institutional reform o f the Indian telecom sector was setting up of an independent regulatory body in 1997 the Telecom Regulatory Authority of India (TRAI), to assure investors that the sector would be regulated in a balanced and fair manner. TRAI has been veste d with powers to ensure its independence from the government. The government has retained the licensing function with itself. The main issue with respect to lic ensing has not been whether it should be with the regulator but that the terms a nd conditions of licensing should involve consultations with TRAI to ensure tran sparency in the bidding process Some of the main functions of TRAI include fixin g tariffs for telecom services, dispute-settlement between service providers, pr otecting consumers through monitoring of service quality and ensuring compliance to license conditions, setting service targets and pricing policy for all opera tors and service providers. - 34 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Further changes in the regulatory system took place with the TRAI Act of 2000 th at aimed at restoring functional clarity and improving regulatory quality. TRAI can frame regulations and can levy fees and charges for telecom services as deem ed necessary. The regulatory body also has a separate fund (called the TRAI Gene ral Fund) to facilitate its functioning. To fairly adjudicate any dispute betwee n licensor and licensee, between service provider, between service provider and a group of consumers, a separate disputes settlement body was set up called Tele com Disputes Settlement and Appellate Tribunal (TDSAT). Telecommunications is th e transmission of data and information between computers using a communications link such as a standard telephone line. Typically, a basic telecommunications sy stem would consist of a computer or terminal on each end, communication equipmen t for sending and receiving data, and a communication channel connecting the two users. Appropriate communications software is also necessary to manage the tran smission of data between computers. Some applications that rely on this communic ations technology include the following: Electronic mail (e-mail) is a message t ransmitted from one person to another through computerized channels. Both the se nder and receiver must have access to on-line services if they are not connected to the same network. E-mail is now one of the most frequently used types of tel ecommunication. Facsimile (fax) equipment transmits a digitized exact image of a document over telephone lines. At the receiving end, the fax machine converts t he digitized data back into its original form. Voice mail is similar to an answe ring machine in that it permits a caller to leave a voice message in a voice mai lbox. Messages are digitized so the callers message can be stored on a disk. Vi deoconferencing involves the use of computers, television cameras, and communica tions software and equipment. This equipment makes it possible to conduct electr onic meetings while the participants are at different locations. The Internet is a continuously evolving global network of computer networks that facilitates ac cess to information on thousands of topics. The Internet is utilized by millions of people daily. Actually, telecommunications is not a new concept. It began in the mid-1800s with the telegraph, whereby sounds were translated manually into words; then the telephone, developed in 1876, transmitted voices; and then the t eletypewriter, developed in the early 1900s, was able to transmit the written wo rd. Since the 1960s, telecommunications development has been rapid and wide reac hing. The development of dial modem technology accelerated the rate during the 1 980s. Facsimile transmission also enjoyed rapid growth during this time. The 199 0s have seen the greatest advancement in telecommunications. It is predicted tha t computing performance will double every eighteen months. In addition, it has b een estimated that the power of the computer has doubled thirty-two times since World War II (With row, 1997). The rate of advancement in computer technology sh ows no signs of slowing. To illustrate the - 35 By- Neeraj Kumar Singh (Roll No520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India computers rapid growth, Ronald Brown, former U.S. secretary of commerce, report ed that only fifty thousand computers existed in the world in 1975, whereas, by 1995, it was estimated that more than fifty thousand computers were sold every t en hours (U.S. Department of Commerce, 1995). Deregulation and new technology ha ve created increased competition and widened the range of network services avail able throughout the world. This increase in telecommunication capabilities allow s businesses to benefit from the information revolution in numerous ways, such a s streamlining their inventories, increasing productivity, and identifying new m arkets. In the following sections, the technology of modern telecommunications w ill be discussed. 4.1 Progress of reforms 4.1.1 Private Participation in Telecom For the provision of basic services, the entire country was divided into 21 telecom circles, excluding Delhi and Mumbai ( Singh et. al. 1999). With telecom markets opened to competition, DoT and MTNL we re joined by private operators but not in all parts of the country. By mid-2001, all six of the private operators in the basic segment had started operating (Ta ble 1). Table 2 shows the number of village public telephones issued by private licensees by 2002. After a recent licensing exercise in 2002, there exists compe tition in most service areas. However, the market is still dominated by the incu mbent. In December 2002, the private sector provided approximately 10 million te lephones in fixed, WLL (Wireless Local Loop) and cellular lines compared to 0.88 million cellular lines in March 1998 (DoT Annual Report, 2002). 72 per cent of the total private investment in telecom has been in cellular mobile services fol lowed by 22 per cent in basic services. After the recent changes, the stage is n ow set for greater competition in most service areas for cellular mobile Over ti me, the rise in coverage of cellular mobile will imply increased competition eve n for the basic service market because of competition among basic and cellular m obile services. 4.1.2 Teledensity and Village Public Phones (VPTs) Indias rapid population increase coupled with its progress in telecom provision has landed I ndias telephone network in the sixth position in the world and second in Asia ( ITU). The much publicized statistic about telecom development in India is that i n the last five years, the lines added for basic services is 1.5 times those add ed in the last five decades! The annual growth rate for basic services has been 22 percent and over 100 percent for internet and cellular services. As Dossani ( 2002) argues, the comparison of teledensity of India with other regions of the w orld should be made keeping in mind the affordability issues. Assuming household s have a per capita income of $350 and are willing to spend 7 percent of that to tal income on communications, then only about 1.6 percent of households will be able to afford $30 (for a $1000 investment per line). - 36 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Teledensity has risen to 4.9 phones per 100 persons in India compared to the ave rage 7.3 mainlines per 100 people around the world. Figure 2 shows the growth ra te of fixed and cellular mobile subscription between 1998 and 2002. Although, th e coverage is still much higher in urban areas - 13.7 in urban areas compared to 1.4 in rural areas, the government has made efforts to connect villages through village public telephones (VPT) and Direct Exchange Lines (DEL). This coverage i ncreased from 4.6 lakhs in March 2002 to 5.10 lakhs in December 2002 for VPT and from 90.1 lakhs in March to 106.6 lakhs in December 2002 for DELs. BSNL has bee n mainly responsible for providing VPTs; more than 84 percent of the villages we re connected by 503610 VPTs with private sector also providing 7123 VPTs . The o verall telecom growth rate is likely to be high for some years, given the increa se in demand as income levels rise and as the share of services in overall GDP i ncreases. The growth rate will be even higher due to the price decrease resultin g from a reduction in cost of providing telecom services. A noteworthy feature o f the growth rate is the rapid rate at which the subscriber base for cellular mo bile has increased in the last few years of the 1990s, which is not surprising i n view of the relatively lower subscriber base for cellular mobile. 4.1.3 Foreig n Participation India has opened its telecom sector to foreign investors up to 100 percent holdi ng in manufacturing of telecom equipment, internet services, and infrastructure providers (e-mail and voice mail), 74 percent in radio-paging services, internet (international gateways) and 49 percent in national long distance, basic teleph one, cellular mobile, and other value added services (FICCI, 2003). Since 1991, foreign direct investment (FDI) in the telecom sector is second only to power an d oil - 858 FDI proposals were received during 1991-2002 totaling Rs. 56,279 cro res (Figure 4) (DoT Annual Report, 2002). Foreign investors have been active par ticipants in telecom reforms even though there was some frustration due to initi al dithering by the government. Until now, most of the FDI has come in the cellu lar mobile sector partly due to the fact that there have been more cellular mobi le operators than fixed service operators. For instance, during the period 19912001, about 44 percent of the FDI was in cellular mobile and about 8 percent in basic service segment. This total FDI includes the categories of manufacturing a nd consultancy and holding companies 4.1.4 Tariff-setting An essential ingredien t of the transition from a protected market to competition is the alignment of t ariffs to cost-recovery prices. In basic telecom for example, pricing of the kin d that prevailed in India prior to the reforms, led to a high degree of cross-su bsidization and introduced inefficient decisionmaking by both consumers and serv ice-providers. Traditionally, DoT tariffs cross-subsidized the costs of access ( as reflected by rentals) with domestic and international long distance usage cha rges (Singh et. al. 1999). Therefore, re-balancing of tariffs - reducing tariffs that are above costs and increasing those below costs - was an essential pre-co ndition to promoting competition among different service providers and efficienc y in general. - 37 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India TRAI issued its first directive regarding tariff-setting following NTP 99 aimed at re-balancing tariffs and to usher in an era of competitive service provision. Subsequently, it conducted periodic reviews and made changes in the tariff leve ls, if necessary. Table 4 shows the current level of telephone charges in India effective from January, 2003. Re-balancing led to a reduction in cross-subsidiza tion in the fixed service sector. Cost based pricing, a major departure from the pre-reform scenario, also provides a basis for making subsidies more transparen t and better targeted to specific social objectives, e.g. achieving the USO. 4.1 .5 Service Quality One of the main reasons for encouraging private participation in the provision of infrastructure rests on its ability to provide superior qua lity of service. In India, as in many developing countries, low teledensity resu lted in great emphasis being laid on rapid expansion often at the cost of qualit y of service. One of the benefits expected from the private sectors entry into telecom is an improvement in the quality of service to international standards. Armed with financial and technical resources, and greater incentive to make prof its, private operators are expected to provide consumers value for their money. Telephone faults per 100 main lines came down to 10.32 and 19.14 in Mumbai and D elhi respectively in 2002-03 compared to 11.72 and 26.6 in 1997-98 (Figures 6 an d 7). Quality of service was identified as an important reform agenda and TRAI h as devised QOS (Quality of Service) norms that are applicable across the board t o all operators (Singh et. al. 1999). 4.2 Pre reform period and Telecommunication in India Before 1990s Telecommunication services in India were complete government Monop oly - the Department of Telecommunication (DoT). Government also retained the ri ghts for manufacturing of Telecommunication equipments. MTNL and VSNL were creat ed in the year 1986.Early 1990s saw initial attempts to attract private investm ent. Telecommunication equipment manufacturing was deli censed in the year 1991. A notable revolution has occurred in the telecom sector. In the pre reforms era , this was entirely in the hands of the central government and due to lack of co mpetition, the call charges were quite high. Further, due to lack of funds with the government, the government could never meet the demand for telephones. In fa ct, a person seeking a telephone connection had to wait for years before he coul d get a telephone connection. The service rendered by the government monopoly wa s also very poor. Wrong billing, telephones lying dead for many days continuousl y due to slackness on the part of the telecom staff to attend to complaints, cro ss connections due to faulty / ill maintained telephone lines, obsolete instrume nts and machinery in the telephone department were the order of the day in the p re reforms era. - 38 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Today, there are many players in the telecom sector. The ultimate beneficiary ha s been the consumer. Prices of services in this sector have fallen drastically. Telephone connections are today affordable to everyone and are also easily avail able. Gone are the days, when one had to wait for years to get a telephone conne ction. The number of telephone connections which was only 2.15 million (fixed li nes) in 1981 increased to 5.07 million(fixed lines) in 1991. Today (as in 2003), there are 54.62 million telephone connections of which 41.33 million are fixed line telephone connections, 12.69 million are cellular mobiles and the remaining 0.60 million are WLL telephones1. Wireless in Local Loop (WLL) telephones and c ellular mobile telephones were unknown in India a few years ago. Cell phones cha rges have come down so much that today one can see even a common man going aroun d with a cell phone in his hand. The private companies are giving various incent ives to attract customers, a situation which is entirely opposite to the conditi ons prevailing in the pre reforms era when one had to wait for years to get a te lephone connection. The first step toward deregulation and beginning of liberali zation and private sector participation was the announcement of National Telecom Policy 1994.NTP 1994 , for the first time, allowed private/foreign players to e nter the basic and the new cellular mobile section. FDI up to 49% of total eq uity was also allowed in these sectors. The policy allowed one private service p rovider to compete in basic services with the incumbent DoT in each DoT internal circle. It allowed duopoly in cellular mobile services in each circle. As part of the implementation of the NTP 94, licenses were issued against license fees t hrough a bidding process. This policy initiated the setting up of an independent regulatorthe Telecom Regulatory Authority of India (TRAI), which was established in 1997. The main objective of TRAI is to provide an effective regulatory frame work to ensure fair competition while, at the same time, protect the interest of the consumers. 4.3 Liberalization and reforms in Telecom sector since early 1990s 4.3.1 1991-92: 1. On 24th July 1991, Government announced the New Economic Polic y. 2. Telecom Manufacturing Equipment license was delicensed in 1991. 3. Automatic foreign collaboration was permitted with 51 per cent equity by the collaborator. - 39 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 4.3.2 1992-93: Value added services were opened for private and foreign players on franchise or license basis. These included cellular mobile phones, radio pagi ng, electronic mail, voice mail, audiotex services, videotex services, data serv ices using VSATs, and video conferencing. 4.3.3 1994-95: 1. The Government anno unced a National Telecom Policy 1994 in September 1994. It opened basic telecom services to private participation including foreign investments. 2. Foreign equity participation up to 49 per cent was allowed in basic telecom s ervices, radio paging and cellular mobile. For value added services the foreign equity cap was fixed at 51 per cent. 3. Eight cellular licensees for four metros were finalized. 4.3.4 1996-97: 1. TR AI was set up as an autonomous body to separate the regulatory functions from po licy formulations and operational functions. 2. Coverage of the term "infrastructure" expanded to include telecom to enable t he sector to avail of fiscal incentives such as tax holiday and concessional dut ies. 3. An agreement between Department of Telecommunication (DoT) and financial inst itutions to facilitate funding of cellular and basic telecom projects. 4. External Commercial Borrowing (ECB) limits on telecom projects made flexible with an increased share from 35 per cent to 50 per cent of total project cost. 5. Internet Policy was finalized. 4.3.5 1998-99: FDI up to 49 per cent of total equity, subject to license, permitted in companies providing Global Mobile Perso nal Communication (GMPC) by satellite services. - 40 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 4.3.6 1999-00: 1. National Telecom Policy 1999 was announced which allowed multi ple fixed Services operators and opened long distance services to private operat ors. 2. TRAI reconstituted: clear distinction was made between the recommendatory and regulatory functions of the Authority. 3. DOT/MTNL was permitted to start cellular mobile telephone service. 4. To separate service providing functions from policy and licensing functions, Department of Telecom Services was set up. 5. A package for migration from fixed license fee to revenue sharing offered to existing cellular and basic service providers. 6. First phase of re-balancing of tariff structure started. STD and ISD charges were reduced by 23 per cent on an average. 7. Voice and data segment was opened to full competition and foreign ownership i ncreased to 100 per cent from 49 per cent previously. 4.3.7 2000-01: 1. TRAI Act was amended. The Amendment clarified and strengthened the recommendatory power of TRAI, especially with respect to the need and timing of introduction of new s ervices provider, and in terms of licenses to a services provider. 2. Department of Telecom Services and Department of Telecom operations corporati zed by creating Bharat Sanchar Nigam Limited. 3. Domestic long distance services opened up without any restriction on the numb er of operators. - 41 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 4. Second phase of tariff rationalization started with further reductions in the long distance STD rates by an average of 13 per cent for different distance sla bs and ISD rates by 17 per cent. 5. Internet Service Providers were given approval for setting up of Internationa l Gateways for Internet using satellite as a medium in March 2000. 6. In August 2000, private players were allowed to set up international gateways via the submarine cable route. 7. The termination of monopoly of VSNL in International Long Distance services w as antedated to March 31, 2002 from March 31, 2004. 4.3.8 2001-02: 1. Communication Convergence Bill, 2001 was introduced in August 2001. 2. Competition was introduced in all services segments. TRAI recommended opening up of market to full competition and introduction of new services in the teleco m sector. The licensing terms and conditions for Cellular Mobile were simplified to encourage entry for operators in areas without effective competition. 3. Usage of Voice over Internet Protocol permitted for international telephony s ervice. 4. The five-year tax holiday and 30 per cent deduction for the next five years a vailable to the telecommunication sector till 31st March 2000 was reintroduced f or the units commencing their operations on or before 31st March 2003. These con cessions were also extended to internet services providers and broadband network s. 5. Thirteen ISPs were given clearance for commissioning of international gatewa ys for Internet using satellite medium for 29 gateways. - 42 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6. License conditions for Global Mobile Personal Communications by Satellite fin alized in November 2001. 7. National Long Distance Service was opened up for unrestricted entry with the announcement of guidelines for licensing NLD operators. Four companies were issu ed Letter of Intent (LOI) for National Long Distance Service of which three lice nses have been signed. 8. The basic services were also opened up for competition. 33 Basic Service lice nses (31 private and one each to MTNL and BSNL) were issued up to 31stDecember 2 001. 9. Four cellular operators, one each in four metros and thirteen were permitted with 17 fresh licenses issued to private companies in September/October 2001. Th e cell phone providers were given freedom to provide, within their area of opera tion, all types of mobile services equipment, including circuit and/or package s witches that meet the relevant International Telecommunication Union (ITU)/ Tele com Engineering Centre (TEC) standards. 10. Wireless in Local Loop (WLL) was introduced for providing telephone connecti on in urban, semiurban and rural areas. 11. Disinvestment of PSUs in the telecom sector was also undertaken during the year. In February 2002, the disinvestment of VSNL was completed by bringing down the government equity to 26 per cent and the management of the company was tran sferred to Tata Group, a strategic partner. During the year, HTL was also disinv ested. 12. Government allowed CDMA technology to enter the Indian market. 13. Reliance, MTNL and Tata were issued licenses to provide the CDMA based servi ces in the country. 14. TRAI recommended deregulating regulatory intervention in cellular tariffs, w hich meant that operators need no longer have prior approval of the regulator fo r implementing tariff plans except under certain conditions. - 43 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 4.3.9 2002-03 1. International long distance business opened for unrestricted en try. 2. Telephony on internet permitted in April 2002. 3. TRAI finalized the System of Accounting Separation (SAS) providing detailed a ccounting and financial system to be maintained by telecom service providers. 4. 3.10 2003-04 1. Unified Access Service Licenses regime for basic and cellular se rvices was introduced in October 2003. This regime enabled services providers to offer fixed and mobile services under one license. Consequently 27 licenses out of 31 licenses converted to Unified Access Service Licenses. 2. Interconnection Usage Charge regime was introduced with the view of providing termination charge for cellular services and enable introduction of Calling Par ty Pays regime in voice telephony segment. 3. The Telecommunication Interconnection Usage Charges Regulation 2003 was intro duced on 29th October 2003 which covered arrangements among service providers fo r payment of Interconnection Usage Charges for Telecommunication Services and co vered Basic Service that includes WLL (M) services, Cellular Mobile Services, an d Long Distance Services (STD/ISD) throughout the territory of India 4. The Universal Service Obligation fund was introduced as a mechanism for trans parent cross subsidization of universal access in telecom sector. The fund was t o be collected through a 5 per cent levy on the adjusted gross revenue of all te lecom operators. 5. Broadcasting notified as Telecommunication services under Section 2(i)(k) of TRAI Act. - 44 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 4.3.11 2004-05 1. Budget 2004-05 proposed to lift the ceiling from the existing 49 per cent to 74 per cent as an incentive to the cellular operators to fall in line with the new unified licensing norm. 2. Last Mile linkages permitted in April 2004 within the local area for ISPs for establishing their own last mile to their customers. 3. Indoor use of low power equipments in 2.4 GHz band de-licensed from August 20 04. 4. Broadband Policy announced on 14th October 2004. In this policy, broadband ha d been defined as an "always-on" data connection supporting interactive services including internet access with minimum download speed of 256 kbps per subscribe r. 5. The Telecommunications (Broadcasting and Cable Services) Interconnection Regu lation 2004 was introduced on 10th December 2004. 6. BSNL and MTNL launched broadband services on 14th January 2005. 7. TRAI announced the reduction of Access Deficit Charge (ADC) by 41 per cent on ISD calls and by 61 per cent on STD calls which were applicable from 1st Februa ry 2005. 4.3.12 2005-2006 1. Budget 2005-2006 cleared a hike in FDI ceiling to 74 per cen t from the earlier limit of 49 per cent. 100 per cent FDI was permitted in the a rea of telecom equipment manufacturing and provision of IT enabled services. 2. Annual license fee for National Long Distance (NLD) as well as International Long Distance (ILD) licenses reduced to 6 per cent of Adjusted Gross Revenue (AG R) with effect from 1st January 2006. - 45 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 3. BSNL and MTNL launched the One-India Plan with effect from 1st March 2006 w hich enable the customers of BSNL and MTNL to call from one end of India to othe r at the cost of Rs. 1 per minute, any time of the day to phone. 4. TRAI fixed Ceiling Tariff for International Bandwidth, Ceiling Tariff for hig her capacities reduced by about 70 per cent and for lower capacity by 35 per cen t. 5. Regulation on Quality of Service of Basic and Cellular Mobile Telephone Servi ces 2005 introduced on 1st July 2005. 6. BSNL announced 33 per cent reduction in call charges for all the countries fo r international calls. 7. Quality of Service (Code of Practice for Metering and Billing Accuracy) Regul ation 2006 introduced on 21st March 2006. 4.3.13 11th plan (2007-20012) FDI in Telecom sector has increased in recent year s with value of 81.62 billion with share of 10% in total inflow during January 2 000 to June 2005. This is mainly in telecom services and not in telecom manufact uring sector. Therefore, it is essential to enhance the prospect for inflow of i ncreased funds. The NTP 1999 sought to promote exports of telecom equipments and services. But till date export of telecom equipment remains minimal. Most of th e state-of-the-art telecom equipments including mobile phones are imported from abroad. There is thus immense potential for indigenous manufacturing in India. C ertain measures like financial packages, formation of a telecom export promotion council, creation of integrated facilities for telecom equipment through SEZ an d encouraging overseas vendors to set up facilities in India, are required for m aking India a hub for telecom equipment manufacturing and attract FDI. The telec om sector has shown robust growth during the past few years. It has also undergo ne a substantial change in terms of mobile versus fixed phones and public versus private participation. The following table and discussions from the report of t he working report on the telecom sector for the 11th plan (2007-2012)will show t he growth of telecom sector since 2003: - 46 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-5 Why Telecom Investment and Expansion??.. Globalization is a central driving force behind the rapid social, political and economic changes that are reshaping modern society and world order (Dunning & Ha mdan, 1997). One of the key elements of globalization is telecommunication. Tele communication plays a central role in helping developing countries participate i n the global economy. Telecommunication is pervasive in all aspects of our lives , from the stereo in your living room to the mobile phone you carry with you. Th ese technological innovations we have in our lives are often taken for granted a nd it is unfeasible for us to imagine how we can function without them. In certa in parts of the world these thing are unheard of and the people who live there h ave not experienced the numerous benefits of modern telecommunications. Telecommunication maybe isn't the highest priority for developing countries. The ma in reason for this is that telecommunication competes with food, housing, sanita tion, health, transport and education. But it is important to focus on telecommu nication investments, because it improves the other mentioned problems. (John Wil liamson, The Rural Telecom Dilemma) 5.1 Traditional methods of financing telecommunication in developing countries Funds for the development of infrastructure projects are traditionally obtained from general taxation or borrowed from multi-lateral and bilateral agencies (Mer na & Njiru, 1998). The level of funding provided from national budget financing will depend on the priorities of the national government and its total tax resou rces. Due to low levels of public finance derived from general taxation, most de veloping countries rely on borrowing from multi-lateral and bilateral agencies t o finance infrastructure developments. This has made most of the developing coun tries heavy with debt and is spending a large portion of their small finances in meeting debt payments, thus making developing countries borrowing to service de bts and not financing infrastructure development projects. The level of finance available for borrowing the traditional sources has reduced in the recent past ( Merna & Njiru, 1998). When introducing telecommunication into a country, financi ng it from state funding is probably the easiest method to use (ITU, 2002). Trad itional methods of public financing and management of infrastructure projects ha ve failed to keep pace with the rising demand for infrastructure services in mos t developing countries. The private sector has participated in infrastructure pr ojects that are financed and managed by the public sector as consultants and con tractors during the implementation phase of infrastructure development projects. The main reasons to fund telecommunications infrastructure are the positive exte rnalities that occur from the services used (World Bank, 1998). - 47 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 5.1.1 Direct economic benefits Costs and time saved. substituting more expensive means of communication and lea rning. 5.1.2 Social and economic as well as political benefits Better provision of social services, e.g. education and health. Decentralization and integration processes. Integration and empowerment of communities. Benefits from telecommunications infrastructure are several and can be grouped i nto three Categories: 1. Human welfare and economic development. 2. Reduction of poverty 3. Improvement of the environment. Infrastructures such as telecommunic ations are a vital factor to the activities of households and to economic produc tion. Providing a service as telecommunications or other infrastructure service to meet the demand of businesses, households and other users is one of the major challenges of economic development Infrastructure represents the wheels of econ omic activity. Infrastructure services are used in the production process of nea rly every sector. Users demand infrastructure services not only for direct consu mption but also for raising their productivity (Bond, 1997). Adequate quantity a nd reliability of infrastructure such as telecommunication are key factors in th e ability to participate and compete in international trade, even in traditional commodities - 48 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 5.2 Investing in telecommunication projects a multiplication effect? One benefit from what the innovations bring to developing nations is the improve ment of the overall economy (Dunning & Hamdan, 1997). By encouraging the establi shment of telecommunication industries within their countries, not only is their GNP boosted from the production of higher valueadded goods, but also, the econo my can progress to that which is predominantly characterized by secondary or ter tiary industries (Dunning & Hamdan, 1997). Should these industries flourish and even expand, investments by large foreign corporations dealing in the modern com munication technologies may be expected as their confidence in the countrys imp roving economy increase. 5.2.1 Macroeconomic Linkages between Infrastructure Reform and Poverty Category Economic growth Benefits More private participation in infrastructure m ay help growth, and thereby poverty reduction, by increasing productivity and ea sing access to capital markets. In Latin America, a 1 % growth in per capita GDP leads to a reduction of the share of the poor of close to half a percentage poi nt. If infrastructure reforms generate economic growth, there should ultimately be some employment creation, but it may take time. Risks If economic growth bene fits mostly the non poor, poverty may not be reduced by much and inequality may increase, with a possible reduction in social welfare. Infrastructure reform can contribute to broadly based growth. Employment Public Expenditures Revenues from reforms (for example, privatisation) and the phasing out of subsid ies generate fiscal space for other public programs that may be better targeted and more pro-poor. Reforms may generate layoffs and reductions in wages, at least during the transi tion period. The negative impact of layoffs on poverty can be mitigated through severance packages and other policies. The poor may be hurt by the reduction of public subsidies for infrastructure services (there may be cuts in the subsidies for both connections and consumption). - 49 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 5.3 What is Information and Communications Technology? Information and Communications Technology (ICT) is an umbrella term that include s any communication device or application, encompassing: radio, television, cell ular phones, computer and so on, as well as the various services and application s associated with them, such as videoconferencing and distance learning. ICT's are often spoken of in a particular context, such as ICT's in education, health care, or libraries (ITU, 2003). The Organization for Economic Co-operation and Develo pment's (OECD) definition makes a distinction between the manufacturing and servic e dimensions of the ICT. In 1998 OECD member countries agreed to define the ICT sector as a combination of manufacturing and services industries that capture, t ransmit and display data and information electronically. The important factor in this broad definition is that, as it breaks the traditional dichotomy between m anufacturing and services, activities producing and distributing ICT products ca n be found everywhere in the economy (OECD, 2002). The definition OECD made, pav es way for understanding the multi-dimensionality of the ICT and its applicabili ty in helping reduce poverty across various sectors (OECD, 2002). The manufactur ing sector of ICT hardware and software contributes to the economic growth and c reates employment in countries like China, Malaysia and Mexico. India, on the ot her hand, has been a beneficiary of global software outsourcing, achieving spect acular growth in this sector. India exports software to 95 countries around the world and serves as a major outsourcing hub. The main market for the Indian soft ware has been the USA, and to a lesser degree, Europe. 185 of the Fortune 500 co mpanies outsourced their software requirements in India alone. ICT industry gene rated 7.7 billion USD in 1999 and creating over 180,000 jobs in India in 1998 (U NDP, 2001). Since these sectors rarely create direct employment for the very poo r. There is no denying of the fact that ICT has been recognized as an important tool for socioeconomic development. Socio-economic development was earlier limit ed to providing services from top-down approaches to the communities who are les s privileged, poor and disadvantaged (Mahmud, 2002). - 50 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 5.4 The digital divide According to ITU (2002) the digital divide is a result of socio-economic dispari ties, and thus it is little different from other income, health and education di vides, linked to poverty. The digital divide, is therefore often just a symptom of a much more profound and longstanding economic and social division within and between societies, and which existed prior to the ICT revolution. Lack of infor mation is one of the major causes for this situation (Jaggi, 2003). Relevant and concerned information, which they want to know, is missing. Hence, the gap betw een information rich and information poor community is also increasing. The new mi llennium has ushered in a world of greater inter-connectivity, accelerating the flow of free data and information, and shrinking time and national boundaries. The information and technology gap and related inequities between industrialized and developing nations are widening: a new type of poverty -information poverty - looms. Most developing countries, especially the least developed countries are not sharing in the communications revolution. (United Nations, 2000) - 51 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 52 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 53 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 54 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 55 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 56 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 57 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India In the past, ICT was generally considered as a luxury and was not considered as a viable option for development policy where other needs, such as building roads , hospitals and providing drinkable water, etc. were considered more urgent (Ped relli et al, 2001). However, the digital divide has today become one of the most prominent considerations in the development divide, and the early judgment is n o longer sustainable, especially when considering the following points: ICT prov ides exceptional opportunities to effectively fight against poverty in the devel oping countries: for example, ICT can support the poor in business development, foster empowerment of the poor, facilitate access to education and health, help improve the environment and prevent natural disasters. Thanks to the huge amount of information easily accessible and hardly controllable by governmental instit utions, it strengthens democracy. United Nations (UN) considers ICT a priority f or the development of poor countries, and many developing countries agree on the importance of the role that ICT can play in their development. International in itiatives are proliferating. The G8 Dot Force, the UN ICT Task Force and several other initiatives are aimed at effectively promoting access to ICT in the devel oping countries. Exclusion from ICT increases the divide between the developed a nd developing countries. - 58 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-6 What is creative or innovative financing? When you are planning for a way to finance a project it is important to do a dee p research of the different specific factors that a country has, and then choose a financial way based on those circumstances. 6.1 What is financial engineering? financial engineering are divided in a public and a private sector. The public s ector has four mechanisms for participation and they are direct, indirect, equit y and risk. The private sector has three mechanisms for participation and they a re debt, mezzanine and equity. 6.1.1 Public-private financial engineering Financial Engineering Public Private Direct Indirect Equity Risk Debt Mezzanine Equity According to Gerald (1998) the word finance was introduced in 1960s. The term fi nancial engineering is even younger and was introduced during the 1980s. A facto r that made it easier to start use financial engineering was the introduction of computers and communication technology or also known as ICT's. This has lowered t he costs and time spending in these operations. Finnerty (1988) defines financial engineering as the development and creative ap plication of financial technology to solve financial problems and exploit financ ial opportunities. - 59 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Financial engineering is the use of financial instruments to restructure an exist ing financial profile into one having more desirable properties. Lawrence Galitz (1995) Financial engineering is about employing theoretical finance and computer modelling skills to make pricing, hedging, trading and portfolio management dec isions. When you are using derivative securities and other methods, financial en gineering aims to precisely control the financial risk that an entity takes on. Methods can be employed to take on unlimited risks under certain events, or comp letely eliminate other risks by utilizing combinations of derivative and other s ecurities (Galitz, 1995). Financial engineering are usually used in these areas: Investment banking. Corporate Strategic planning. Risk management. Primary and derivative securities valuation. Swaps and derivatives trading or dealing. Finan cial information systems management. Portfolio management. Securities trading. Usually financial engineering are used to reduce the financial risk, a second th ing is to restructure cash flows for better financial management (Galitz, 1995). Because financial engineering are used to finance projects it can be used to fi nance telecom projects around the world, and especially in developing countries. This kind of infrastructure project is according to Merna & Njiru (2002) import ant in these countries because they are in need for that. Infrastructure project s in developing countries bring several improvements of the country, they lead t o: Human welfare and economic development. Reduction of poverty. The environment will be improved. - 60 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.2 Financing Strategies In this section we will present the different strategies involved when financing telecommunication projects. 6.2.1 Build-Operate-Transfer (BOT) The build operate transfer system was according to Merna & Njiru (2002) introduc ed in the early 1980s by Targut Ozal who was the Prime Minister in Turkey at tha t time. The BOT system has also been referred to Ozal's formula (Merna & Njiru, 20 02). A normal BOT project last approximately 20-30 years. BOT means that a conso rtium owns the project for a specific time period. In other words, a franchise i s received by a private entity from the public sector. This involves finance, de sign, construction, and operates a facility for a specific period. While the pro ject is operating it is allowed to charge users to cover the investments. When t he time period has exceeded, the ownership will be transferred back to the publi c sector. The revenue from the project is used to cover the debts and provide re turn on equity. 6.2.2 Build-Transfer-Operate (BTO) Menheere & Pollalis (1996) says that BOT are often used in projects that involve privatization or public private partnership. BOT and BOO also have this charact eristics, but in BTO the ownership of the facility is directly transferred from the private party when the delivery is done. According to Ernst & Ngoc-Nga Pham (1994), the completed BOT project is transferred to the government. Then the gov ernment signs a contract with a private company to be able to operate the facili ty. During this time the government receives a payment from the operator. The BT O system was successfully used in Thailand, 1990, when they privatized parts of the telephone system. 6.2.3 Build-Own-Operate (BOO) As mentioned in BTO, BOO are used in projects that involve privatization or publ ic private partnership. When you are using the BOO system, the private party hav e the ownership of the facility during the projects whole lifetime. Because the private party runs the facility they get return of their investments. They are a lso allowed to sell the facility at any time, at market value. In short terms th e private party build, own and operate the facility. - 61 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.2.4 Build-Lease-Transfer (BLT) Ernst & Ngoc-Nga Pham (1994) tells that the completed facility is leased to the government agency when you are using the BLT system. The roll that the governmen t agency has is to assume the operating risk. The government agency is also resp onsible that payments are done to the private sector, these payments provides a fixed rate of return on equity and amortising of debts. While using the BLT syst em the government can shift the financial risk to the private sector. 6.2.5 Fiber-optic cable or satellite ITU (2004-09-20) defines this strategy as through fiber-optic cable or satellite set up a telecommunication network in developing countries. Some examples of th is method are shown below. Fiber-optic Link Across the Globe (FLAG) FLAG coopera te with RASCOM (The Regional African Satellite Communication System) to ensure c onnectivity to countries that are land-locked. South African Far East (SAFE) Thr ough private financing a telecommunication network are planned to be set up in t his area. AFRILINK This is a pan-African proposal to set up submarine cables thr ough the entire continent's coastline. Project Oxygen This is according to ITU may be the most interested fiber-optic cable projects. This fiber-optic cable networ k are planned to cover 90 % of the world's international telecom traffic. This met hod is like cross border initiatives, a method of financing telecommunication th at will be covered later. - 62 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.2.6 Privatization According to Ferreira & Khatami (1996) the public ownership during 1970s and 198 0s in developing countries lead to economic instability and structural inefficie ncies. When privatization was introduced in late 1980s the economy has improved in these countries. For instance in Latvia the government sold 60 % of the telec ommunication to private companies, which lead to many bidders that wanted to inv est in the country's telecommunication, for example Telia, Telekom Finland, France Telecom, Tele Danmark, OTE (Greece) and Deutsche Telekom. (Ferreira & Khatami, 1996) According to Merna & Njiru (2002) privatization is the most innovative way of financing infrastructure projects. The definition of privatization is accord ing to Gayle & Goodrich (1990): The process of reducing the roles of government w hile increasing those of the private sector activities or asset ownership. Merna & Njiru (2002) also say that privatization should be preceded by liberalization because it will help open up the market to international competition. The privat ization shall then be followed by a deregulation and the main purpose of this is that the privatized enterprises should face market forces. The main benefits th at a privatization results in are the following: Increased quantity of productio n. Improved quality of the output. Reduced unit cost of production. In longer te rms, expanded opportunities for growth and employment. Generation of new technol ogies. Increased foreign investments. - 63 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.2.7 Acronyms Merna & Njiru (2002) describes a number of different acronyms that involves in d ifferent ways to finance infrastructure projects, these are: BOD BOL BOOST BOOT BRT BCC DBOM DBFM DBFO FBOOT ROL ROT Build-operate-deliver Build-operate-lease. Build-own-operate-subsidies-transfer. Build-own-operate-transfer. Build-rent-transfer. Business-cooperation-contracts . Design-build-operate-maintain. Design-build-finance-maintain Design-build-fina nce-operate Finance-build-own-operate-transfer. Refurbish-operate-lease. Rehabil itate-operate-transfer. - 64 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.3 Financing ways Here we will present the most common innovative ways to finance telecommunicatio n projects. 6.3.1 Leasing According to Sigurd Hansson (1998) there are three different kinds of leasing: 1 . Operational leasing The company that lends out the material are responsible fo r reparations and maintains. If new material or products are launched the compan y upgrade the system to these new models. 2. Financial leasing In this case a le asing company will be involved. The country that wants to set up a telecommunica tion network in their country give monthly payments to the leasing company. The leasing company then gives a payment to the supplier which sends the material fo r the telecommunication network to the country. 3. The third way is when a sale of a service happens in the same time period when lending out a good. How leasing works today: Customer Supplier Leasing Company - 65 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Deeper explanations of the leasing process that are showed in this figure are: 1 . The customer decides which supplier they want to buy from; they decide price, delivery and installation conditions. They also decide that the leasing company will be the buyer. 2. The leasing contract is established between the customer a nd the leasing company. 3. The leasing company then buys the equipment and it wi ll be delivered to the customer. 4. The leasing company pays for the equipment t o the supplier. 5. When the customer has got the equipment, they will start to p ay the leasing company, usually every month. 6. When the renting time has expire d, the customer can continue to rent the equipment, but at this time to a signif icant lower price. The big advantage to lease instead of buying is that the cust omer does not need to have financial resources except for the monthly payments. This will lead to that the country can establish a telecommunication network in a short time period and then pay the leasing company on a monthly basis. 6.3.2 Joint venture loans If the loan for the investment is very big it could be difficult for one single company to lend the total sum. One solution to this problem is joint venture loa ns, which means that two or more companies share the risks and benefits of the l oan. Copeland, Koller & Murrin (2000) explain that joint venture loans are an ef fective partnership, but to make this happen they must be structured. An survey that these authors have made show that when two company are involved in a joint venture that are evenly split, there is a 60 % chance to success, but if the joi nt venture is not evenly split the chance to success is only 31 %. It is also im portant in this perspective to have two companies that are evenly strong and als o as strong as possible to increase the chance to success. If one of the compani es is weaker than the other it will generate a hinder to successful management, the main reason for this is that the strong part of the joint venture will domin ate in decision making, which will lead to that the strong company put its own i nterest above the weaker company and even the whole joint venture. Flexibility a nd autonomy are the main factors for a joint venture to work well. Flexibility i s important because the market and customer needs changes all the time. To facil itate that these factors will be involved in the joint venture, it is recommende d that an independent president are chosen and also do a full business system. - 66 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India A joint venture often ends when the predetermined goal has been reached; it is r ecommended to prepare for this break up in advance so that all parties that are involved are prepared for that. 6.3.3 Gifts Gifts to developing countries could come in different forms. It could be a sum o f money from example a foreign telecom operator that wants to invest in new mark ets. A better method for the telecom operator would be to give telecom equipment to the developing country, which would lead to a lock-in effect. The most commo n way gifts are given are from help organizations like U.S. Agency for Internati onal Development (USAID) or SIDA, that makes a donations by either give out mone y for a certain project, give guarantees or subsides. 6.3.4 Guarantees When an investor sends money that is aimed for a specific developing country, th ere could be a risk that the country uses the money for other projects. To reduc e this risk the investor could, according to Stromberg (2003), give the country some instructions where the money will be spent, in other words set up guarantee s for the investment. These guarantees provides credit enhancement to financing infrastructure projects which according to Stromberg (2003) leads to economic gr owth and reducing poverty. An effect that the guarantees has, is when they are s et it could be easier to get money from other investors, because they see that i t is decided where the money will be invested and they do not risk to send money to developing countries that will use the money for other projects than has bee n determined (Stromberg, 2003). 6.3.5 Telecom subsidies A definition of a subsidy is according to Cannock (2001) a grant or a monetary g ift, usually given from the government to a specific project. Another form of su bsidies is that the government reduces the taxes for a company that needs assist ance; thereby they get more financial resources. The subsidiary method is good t o financing telecommunications projects. One part of the subsidy has been a gift from the government to the operators. The next part of the money will be paid w hen the equipment has been installed. Finally the remaining money will be paid t o the operators in semi-annual installments that will last for several years. - 67 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.3.6 Aid A definition by Merna & Njiru (2002) of aid is a direct gift of money from a gov ernment or the World Bank. The gift of money could be in different forms for exa mple loans, grants and funds to development banks. The aid is aimed for developi ng countries to raise their community and social welfare. The donor could be inv olved in the project and decide what shall be done. Aid is usually aimed for two different sectors. Projects aid This form of aid is often very structured from the donor. Programme aid This form of aid finance imports in return for sectoral policy reforms. It can be described in two different forms. Bilateral aid The d efinition of bilateral aid is money sent from one government to another governme nt. This aid is aimed to finance a specific project in the country that gets the money. Some examples of bilateral aid agencies around the world are UK's Departme nt for International Development (DfID), the Overseas Economic Cooperation Fund (OECF) of Japan and finally Kreditanstalt Fur Wiederaufbau (KFW) in Germany. Mul ti-lateral aid This aid is primarily aimed for infrastructure projects. These pr ojects are financed by multilateral development banks (MDBs). Some examples of t hese banks are the World Bank Group, the Asian Development Bank (ADB), the Afric an Development Bank (AfDB) and the InterAmerican Development Bank. These banks d rawing funds from several countries and their loans are usually more favorable t han commercial banks. - 68 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.3.7 Cross-border initiatives A cross-border initiative means that several countries cooperate to build up a c ommon telecommunication networks. Through the past decades several projects of t his type has been successful in developing countries (ITU, 2004-09-20). Pan-Afri can Telecommunications Network (PANAFTEL) This project was built in the mid 1970 s. It involved a cross-border network of radio links. The Regional African Satel lite Communication System (RASCOM) This project was established in 1993. The tas k of the RASCOM project was to harness the satellite communication for the 40 Af rican countries that was involved. The SPACECOM Project This project was launche d in 1994 by ITU. This project focused on bringing space technology to rural dev elopment, especially in Kenya, Uganda and Tanzania. 6.3.8 Vendor and supplier financing According to ITU (2004-09-20), vendor and supplier financing for telecommunicati on can take two different forms. 1. Interest rate subsidy. This involves reducti on in interest payments of a loan. 2. Loans and guarantees. When this financing method is used the vendor put its own credit at risk. Pacific Telecommunications Council (2004-10-20) illustrate that vendor and supplier financing could have a good supportive role in building up telecommunication, but a problem could be t hat the large amount of money that is required for these projects, could be diff icult to capture through this method. A problem that ITU (2004-09-20) says about vendor and supplier financing is that this method only covers the cost of impor ted equipment, and therefore not other costs like labor and domestic equipment. Despite this there have been successful telecommunication projects in developing countries that have used this method, for example in Thailand - 69 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.3.9 High yield dept (junk bonds) High yield debt also referred to junk bonds means that the private investors are satisfied with a good return. To be able to receive a good return from a teleco m project it is important to invest at an early stage (ITU, 2003). Ideally for t he investor is of course to have high returns and low risk. It is very difficult to combine these two. Therefore the investor tries to be positioned between the se two goals with a medium return and risk. According to (ITU, 2003) junk bond i s a successful tool for financing telecommunication projects in the future. 6.3.10 Reverse bid A definition (Merna & Njiru, 2002) of a reverse action would be that the buyers post their need for a project and then the suppliers bid to realize the need. Th e supplier that demands the least amount of money gets the deal and could start the project. A connection to this market could be to start with a developing cou nty that are interested in building a telecommunication network in their country . They spread the information to different suppliers and get bids from them. The n they decide which offer that are best suitable for them. This could be a good starting point and thereafter decide which financial tool the country wants to u se to invest in the telecommunication network. (Merna & Njiru, 2002) 6.3.11 Pre-Paid The pre-paid system was introduced in Germany in the 1920s, but it is a fairly r ecent concept in the United States. A definition (Investorwords, 2004-12-02) of pre-paid would be that you pay for access to a certain product or service in adv ance. These payments are often done on a monthly basis. A connection to the tele communication industry would be that when the telecommunication network is built , the country has to pay on a monthly basis to access the network. 6.3.12 Options According to Neftci (2004), options are an instrument of volatility. There are s everal kinds of options, the two basic ones are call and put options, which Hull (2003) defines as follow. Call option A call option gives the holder the right but not the obligation to buy the underlying asset at a certain date for a certa in price. - 70 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Put option A put option gives the holder the right but not the obligation to sel l the underlying asset at a certain date for a certain price. Neftci (2004) desc ribes that there are several more options but they usually are divided in two ca tegories, which are plain vanilla and exotic options. The options in the plain v anilla category are treated with the Black-Scholes model, which is a model for p ricing European options. This model was developed 1973 by Fisher Black, Myron Sc holes and Robert Merton. The main difference between an American option and a Eu ropean option according to Hull (2003) is that the American option could be exer cised at any time during its lifetime and the European option only can be exerci sed at the end of its lifetime. Options can be used in big projects like a telec ommunication investment. The advantage that this method has is that it provides insurance for the investor. The main reason for this according to Hull (2003) is that the investor has the right but not the obligation to take an action, if th ere would be big price movements the investor can take an action on the basis of that. 6.3.13 Self financing As mentioned in many articles, for example by the Ministry of Communication: Sci ence and Technology (2004-11-19), a criteria for a successful self financed tele communication company in a developing country is that there are already a teleco mmunication network in the country, that the company owns. 6.3.14 Public Private Partnership Merna & Njiru (2002) indicate that public private partnership could be divided i nto three different types of partnerships. These are sharing, dominant and indep endent. Sharing public private partnership This partnership means that the priva te and public sector share the risk for the project. If there is any risk that t hey together cannot control, the public sector usually takes the responsibility for that risk. Dominant public private partnership This kind of partnership is u sually financed by a soft loan that the public sector usually is responsible for . A soft loan is a loan with lower rates than an ordinary bank loan. - 71 By- Ne eraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Independent public private partnership This partnership is used in projects with high risks. When this method is used the public sector does direct financing in vestments in the project. Principally is a public private partnership a form of privatization, but with a big difference that the public sector also are involve d. The partnership is involving the government and one or more private sector co mpanies. (Merna & Njiru, 2002) 6.3.15 Domestic ways of financing telecommunication investments If a country is not interested in foreign investors for their telecommunication projects, there are some different options that could be successful. Private sec tor investments According to Kessides (2004), investments from foreign private c ompany could be a big risk for the developing countries. If the country instead chooses to concentrate on the private sector in the domestic market they will re duce the risk. Private sector investments have risen from 6.2 billion USD in 199 0 to 57.3 billion USD in 1998. In resent years it has reduced a bit. Public sect or investments This is a method that was used in Pakistan when they upgraded the ir telecommunication system in 1980. The public sector in a developing country c ould be one part of financing a telecommunication network (Asia Trade Hub, 200410-28). Government-owned telecommunication According to Hadi Salim (1995) this s ystem leads to that the government has monopoly of the telecommunication market in the country. As mentioned in the article by Hadi Salim there could be a probl em with government owned telecommunication because the government is suspicious of technology. Customers pay for the investments If a country chooses to use thi s method they have to make precise calculation of how much the investments will cost. When this is done they have to continue calculate how many customers and h ow much they have to use the telecom services on a monthly basis. When this is d one they know how big the loan would be and they also know how long time it will take to repay it (ITU, 2003). - 72 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.4 Financial risks When it comes to financial risks that could be involved in telecommunication pro jects Merna & Njiru (2002) claims that risks are usually known before because th ere are always two parties involved that has opposite viewpoints. The authors de fine financial risks as: The impact on the financial performance of any entity ex posed to risk. There are several kinds of financial risks that Merna & Njiru (200 2) describes, and here follows a presentation of them. Currency risk This kind o f risk is usually seen in cross border flow of funds. When a country that wants to invest in telecommunication has to deal with foreign currencies, it normally results in some form of currency risk. A problem that can arise in developing co untries is that they have exotic currencies, which means that they have a curren cy that not are traded on any existing exchange market, which may result in a mo re difficult process. The currency risk could also be a problem for foreign inve stors and other organizations that give money support to developing countries, w hich could result in big losses when the money are exchanged to a local currency . Interest rate risk Interest rate risk is a risk that affects both the borrowing and investing sides directly. This risk is usually classified in a short and a l ong time perspective. In the short time perspective the investment and its risk mainly depend on the money market. In the long time perspective the rate could b e paid for example every 6 month until the loan matures. Equity risk The equity is usually connected with the share capital, if the shares rise or fall it will affect the equity. The risk of equity is connected with warrants and convertible bonds. If a company let investors buy warrants and bonds on the shares of a com pany there would be a risk involved, because the company could both win and lose on the deal, because they do not know if the share price will rise or fall in t he future. - 73 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Commercial risk Commercial risks are related to the completion, operation or inp ut and output of the project and it could affect the financial performance. A co nnection to the different related factors are that the first which is completion , is a risk if the project is not finished when it was supposed to, which will r esult in more expenditure. The second, which is operation, could be a risk if, f or example a telecommunication does not work properly or are involved in some le gal issues which also result in more expenditures. The third and final, is input and outputs. The risk in this case is that a project often are dependent of sup pliers, if the supplier for some reason cannot deliver the required material, th e whole project could be affected. Liquidity risk Liquidity risk has a connection to commercial risk. If the projec t does not reach its goals it could result in a liquidity risk. This risk is usu ally a result of that a seller is forced to sell under the market price which wi ll result in lower incomes and volatile liquidity. Counterparty risk or credit r isk Counterparty risk which is also called credit risk is seen in any financial transaction that involves two parties. An example could be a developing country that has signed a contract with a financial institution of borrowing money; this will be enclosed with a risk because it is not for sure that the financial inst itution could accomplish the deal at the right time. It could also be in diverse , when the loan is going to be paid back and the lender cannot accomplish the pa yments, because of some problems. Political risk This kind of risk follows by a publicity guaranteed loan or a loan directly to a foreign government. The defini tion of political risk is: The exposure to a loss in cross-border lending caused by events that are, at least to some extent, under the control of the government of the borrowing country. (Nagy, 1979) In other words, a political risk is the r isk that the investor could lose the money because of the countries political st ructure. Some examples of political risks are tax laws, expropriation of assets, the government repudiation to sign a contract, inconvertibility of foreign curr ency. Other factors that may affect the political risk in a country could be war , terrorism or civil disturbance. - 74 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Regulatory risk Montgomery Research (2004-12-02) defines regulatory risk as the external regulatory actions and development that can impact the financial and op erational performance of a company; this could include revenue requirement, cost structure and operational processes. It is important that companies understand how the regulatory market model works and then try to lessen the effects of the regulatory risk. Montgomery Research (2004-12- 02) gives the following statement that companies should follow. 1. Assign probabilities for every potential outco me for each regulatory scenario. 2. Quantify the financial impact for each regul atory scenario to the company. 3. Finally, calculate the expected results and va riance for each regulatory risk scenario. Inflation Inflation is defined (Invest orwords, 2004-12-02) as a sustained rise in the general levels of prices, which in other words means that the money loosens its value and the price for differen t projects could reach unlimited values. One factor that can contribute to infla tion is that the money supply in a specific country increases. There are a lot o f different methods of measuring inflation and here follow a description of some of them. o Consumer price index This method compares the prices of products at different time periods. The products that are chosen, are products that are boug ht by the typically consumer. o Producer price index This method compares the pr ice incomes for different products to a producer at different time periods. The main difference between this method and the consumer price index is that the tax es that the consumer pays could vary from the taxes that the producer has to pay . o Wholesale price index Here the change of price is measured at the wholesaler . o Commodity price index The price change of a selection of commodities is meas ured. - 75 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India o GDP deflator This is measured by the total amount of money spend on GDP. This method is the broadest measure of price levels. (Investorwords, 2004-12-02) A sm all amount of inflation in a country usually has a positive effect on the econom y, but when the inflation increases it could have dramatically effects on the ec onomy. A British economist called A.W. Phillips found a relationship between inf lation and unemployment. When the inflation is high, the unemployment is low and vice versa, the Phillips curve is shown in the following figure. - 76 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.4.1 Other typically risks in telecommunication projects Merna & Njiru (2002) describes some other risks that may affect, for example an investment in telecommunication. Technological risk This is a risk that could be seen in all technological projects, for example in a telecommunication network. The risks contain temporarily shut downs of the network for some reasons, it ca n also be because of an upgrading of the network. Operating risk These risks are involved in commercial risk and it covers these scenarios. 1. The risk that the project cannot run at the predicted efficiency. 2. The risk that the project ge ts too expensive to run. 3. The project could be delayed, for example the suppli ers could not deliver the needed material. 4. Natural disasters may arise that d isturb the projects, for example fire and flooding. High transaction costs This is a part of operating risk, which contain the risk that the cost of using a net work gets too high. Transaction cost also covers the risk that the business deal s are too - 77 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.5 Leverage effects on ways to finance telecommunication A definition of leverage could be as follow, The ability to control large amounts of a financial asset with a comparatively small amount of capital. (The Handbook of World Stocks, Derivative & Commodity Exchanges, 2004-10-29) Usually the road to a successful leverage project is that a person/country that wants to invest in a project spends a minor sum of their budget and loan the rest of the money. This will generate that they have money left for other investments (The Handbook of World Stocks, Derivative & Commodity Exchanges, 2004-10-29). A leverage effe ct can be seen in three different projects: 1. Start-up grants/gifts. 2. Financi al snow-ball effect. 3. Creating new investments. (LOCREGIS, 2004-10-29) A conne ction to this segment could be a developing country with a limited amount of mon ey that wants to invest in telecommunication, therefore creating new investments . To be capable of manage this, is to take some percentage of their money and th en loan the rest to build up the telecommunication network. Then they will have the remaining money left to upgrade the network or spend in other projects. Acco rding to the International Labor Organization (2004-10-29) there is another view of leverage effects which are seen when the projects are implemented. This invo lves factors that arise because of the new project. Some examples could be that new projects generate new jobs and new business can arise that has this project as a requirement for their own business, a good example is telecommunication. Ac cording to the World Bank (2004-12-02), new jobs in developing countries will ge nerate poverty reduction. The new jobs will also generate economic growth which also helps reducing poverty. - 78 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.6 How financial development may promote growth - 79 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.7 The importance of telecommunication for economic growth A well spread out telecommunication network provides a great impetus to the econo mic growth in a country. Considering the significance of its contribution and al so the need to integrate with the global economy, several policy initiatives hav e been taken by the government. (Ministry of Finance, Govt. of India, 2004-11-26) The Indian economy is on the path of recovery. The gradual opening up of the ec onomy ensured steady growth even at a time when other countries were in the grip of massive slowdown. India's move toward globalisation by progressive reforms, es pecially in the telecom sector which has been driven by transparent policies and better market conditions to attract foreign investments, is responsible for the economic growth in India (Proctor & Olivier, 2002). Guislain & Qiang (2003) arg ues that the telecommunication sector includes both the production and distribut ion of equipment and the delivery of services (see Figure 12). It is one of the key drivers of economic growth and plays a vital role in the competitiveness of modern economies. Furthermore, it is often among the first infrastructure sector s to allow private and foreign provision, and therefore, a trend setter for othe r sectors to open up and follow the path of reform. - 80 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India A study by Contessi (2003) shows informal evidence, that there is positive corre lation between GDP per capita of a country and its endowment of connections. Cor relation between teledensity and GDP per-capita (178 countries) An econometric study by Jacobsen (2003) analysed the relationship between teleco mmunication development and economic growth. The study showed that there seems t o be larger growth effects from telecommunication development in developing coun tries than in developed countries, a result that contradicts earlier findings. T he result stems from a larger indirect impact of telecommunications in other sec tors. - 81 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 82 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India The above figures show the correlations Jacobsen (2003) made. They show that in the period between 1990 and 1999, GDP is strongly correlated with main telephone lines. The relationship between GDP and personal computers and between GDP and telecommunications investment is also large, while cellular telephones seem to h ave somewhat lesser correspondence with GDP. - 83 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 6.7.1 Successful developing countries In this section we will present the data we have collected on the developing cou ntries that have been successful in developing and expanding communication. The data is gathered from the Internet, literature and articles. Financing ways deve loping countries prefer (42 developing countries) Strategies developing countries prefer (42 developing countries) - 84 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-7 B.S.N.L. as a Telecom Service Provider BSNL has installed Quality Telecom Network in the country and now focusing on im proving it, expanding the network, introducing new telecom services with ICT app lications in villages and wining customers confidence. BSNL is numero uno opera tor of India in all services in its license area. The company offers vide rangin g & most transparent tariff schemes designed to suite every customer. 7.1 BSNL as an integrated telecom service provider BSNL being the oldest telecom player, if we take the legacy of DoT before its fo rmation, is a diverse telecom service provider. It is niche in all verticals of telecom fields and is serving the nation by being with the nation. All the servi ces provided by the company can be broadly classified as: Wire Line Services CDMA WLL Limited Mobility Services GSM & CDMA Based Full Mobi lity Services National Long Distance Services International Long Distance Servic es Leased Lines, D.S.P.T., & I.S.P. Services. IN Services viz. Prepaid calling c ard etc. - 85 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India To fulfill f products se various e: 1.1 1.2 the telecom service need of the nation, BSNL offers different kinds o suiting the different kind of people with different kind of need. The product offered by BSNL can be summarized as follows: 1. BSNL Landlin 1.3 1.4 Fixed Line Pre-paid (FLPP) BSNL PCO Phone plus services ISDN

2. BSNL Mobile: 2.1 2.2 2.3 2.4 Prepaid and Postpaid Unified Messaging WAP/ GPRS / MMS 3G services 3. BSNL WLL: 3.1 3.2 3.3 Post-paid fixed mobility Post-paid and Pre-paid with fu ll mobility BSNL data card, NIC and EVDO 4. BSNL Internet: 4.1 4.2 4.3 4.4 4.5 4.6 4.7 ial up access ISDN dial up access Leased line S) Account free Internet dial up access based SANCHARNET CARD Wi-Max WAP & GPRS Co-location 4.8 4.9 4.10 4.11 4.12 4.13 PSTN d access Direct Internet Access (DIA on CLI BROADBAND connection Wi-Fi service Web-hosting SMS & Bulk SMS

- 86 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 5. BSNL Managed Network Services 6. MPLS BASED VPN SERVICE 7. Leased Line : 7.1 7.2 Managed Leased Line Service(MLLN) Access link Services 8. Intelligent Network Services (IN) 9. Audio Conferencing 10. Video Conferencin g 11. BSNL Web Conferencing 12. Fleet Management Solution 13. Inet 14. EPABX 15. Data Communication 15.1 15.2 15.3 HVNET RABMN INMARSAT - 87 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 7.1.1 New Initiatives WiMAX: Tender Invited for 1000 BTS at Rural Block HQs covering 25000 village com munities centers. IPTV: Launched in Three Cities viz. Bangalore, Pune & Kolkata. Agreement signed with Franchisees for another 50 Cities VOIP: EOI under conside ration 3G Services: Have been launched in Feb-2009 in select cities and now pan India roll-out is on the card. New Generation N/W: Is being deployed to meet fut ure technology compatibility. DTH Services: Planning's to launch this service is o n the card. 7.1.2 Developmental Plans (2008-09) Expansion of 13.5 m GSM lines. Expansion of 3m Broadband. Expansion of 2 m WLL ( CDMA) lines Introduction of 200K IP Transit Switch. Addition of 1206 K TDM TAX A ddition of 200 IDRs Satellite System for Inaccessible Stations. BSNL has set up a separate international business division to explore telecom opportunities abro ad. Moving aggressively on its overseas expansion plans, BSNL chairman Mr Kuldee p Goyal had said the company would look at valuable buyout opportunities based o n due diligence of the target company. The PSU had already received in-principle board approval to enter the global market and bidding for Tunisia was one such step. The North African Tunisian country is set to issue new licenses for fixed line and basic mobile services. The licences, initially for 15 years, include na tional and international longdistance services. - 88 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India As per the records found from the company sources, the company's presence in diffe rent categories of services are as follows: Basic Telephone (Bfone) Total Number of connections WLL (Tarang) Total Number of connections Village Public Telephon es Total Number of Telephones Public Telephones (Local, STD and Highway) Total N umber of Public Telephones STD Stations Number of STD Stations Transmission Syst ems as on 30.09.08 Transmission Systems Digital (Route kms) Coaxial Microwave UH F Optical Fiber (Route kms) 6,024 50,430 45,130 5,60,086 as on 30.09.08 33,206 a s on 30.09.08 19,31,182 as on 30.09.08 5,22,120 as on 30.09.08 46,96,641 as on 3 0.09.08 3,01,22,269 Satellite Based Services (as on 30.09.08) MCPC-VSATs IDR Systems (2 Mb/ 8 Mb) 82 99/38 - 89 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Mobile Services (As on 28.02.2009) Total number of connections District Headquarters covered 46,684,049 618(All covered)

Total number of villages covered Total number of Town/cities covered National Hi ghway covered (Km) State Highway covered (Km) Railway route covered (Km) 2,90,975 19,971 55,896(out of 60,519) 74,930(out of 1,240,77) 42,454(outof 54,73 1 - 90 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Telex/Telegraph Offices Departmental Telegraph Offices Telecom Centers Combined Offices Bureau-Fax Centers 961 716 44,754 1427 - 91 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 7.2 Growth Plan BSNLs future plan include a fast expansion programme of increasing the present 34 million lines to twice that number by 2005 and some 120 million lines by 2010 . The shift in demand from voice to data domination, and from wireline to wirele ss, has revolutionized the very nature of the network. BSNL has already set in p lace several measures that should enable it to evolve into a fully integrated mu lti-operator by 2005 and its incumbent status, size, infrastructure and human re source should certainly, give it a distinct advantage. Consolidation of the netw ork and maintaining high quality of service comparable to International standard s is the key aim of the Growth Plan. Objective of the plan are: The telephone co nnection shall be provided on demand and it shall be sustained. The Network shal l be made fully digital. All the technologically obsolete analog exchanges will be replaced with digital exchanges. To provide digital transmission links up to all SDCAs. Digital connectivity shall be made available to all the exchanges by 2007. Extensive use of Optical fiber System in the local, Junction and long dist ance network so as to make available sufficient bandwidth for the spread of Inte rnet and Information technology. ISDN services shall be extended to all the dist rict headquarters, subject to demand. To provide Intelligent Network Services, p rogressively all over the country (major cities have already been covered). To s et up Internet Nodes progressively up to District headquarters level. Upgrading existing STD/ISD PCOs to full fledged Public Tele-Info Centers (PTIC) for suppor ting Multi media capability and Internet Access. Replacement of life expired, an alogue coaxial and radio systems. Introduction of Wireless technology (Supportin g Internet Access) and optical fiber technology in subscriber loop. Introduction of latest telecom services like National directory enquiry, computerization etc . - 92 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Cellular Mobile Service Cell One of BSNL was launched on 19th October 2002 . T he scheme will cover 4 million customers in two phases. Phase-I will cover about 1.5 million customers covering about 1000 cities during 2002-03, which will be expanded to 4 million in phase-II. BSNL has decided to lease out its passive infrastructure that includes towers ma inly, to other telecom companies in semi- urban areas in the country. BSNL has m ore towers in tier-II and -III cities, So it has decided to lease out those towe rs with unutilized capacity to the operators." The agreement would be on bilater al basis. Aimed at generating more revenue and fully utilizing the huge tower ba se, BSNL plans to cash in on its pan-India presence. It operates all over India, except Delhi and Mumbai. The PSU plans to lease out its Ground Based Towers in circles such as Andaman and Nicobar, Andhra Pradesh Assam, Bihar, Gujarat, Chhat isgarh, Haryana, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Kerala , Maharashtra, Madhya Pradesh, North East, Orissa, Punjab, Rajasthan, Uttar Prad esh (East and West), Uttranchal and West Bengal. BSNL has over 60,000 towers and the most of them are in semiurban areas where private operators have small foot print. According to the industry analysts, erecting one cell site costs about Rs 30 lakh, which takes the most of the cost and time for any operator. State-owned BSNL has floated a tender for 93 million lines. BSNL executives say the total value of the contract could be about Rs 40,000 crore. Off these, about 21 million lines are reserved for third generation (3G) services. The tender de tails have been sent to global network majors, including Ericsson, Nokia Siemens , Motorola, Nortel, Alcatel Lucent, Huawei and ZTE. The bids of all companies wi ll be opened on July 16-2008. The BSNL contract is split into three parts of 25 million each for the North, South and West Zones and 18 million for the East Zon e. The tender conditions also stipulate that one company cannot be awarded more than two zones; this implies that the maximum order than equipment major can bag is for 50 million lines. In a bid to infuse additional competition, BSNL has di vided the tender into four components, 2G lines, 3G lines, infrastructure and op erating and business support systems (OSS & BSS). This implies, companies can bi d individually for any of the four components, or a single company can also bid for all the components. About 30% of the contract size, which is equivalent to 3 1 million lines, could be reserved for state-owned ITI. The reservation for ITI is likely to be outside this tender, if this be the case, the actual size of the orders could be 124 million lines - 93 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 7.3 Projects Recently Implemented / Under Development National Internet Backbone of BSNL Voice over IP Broadband Services - ADSL & Hig h Speed Internet Managed Leased Line Network (MLLN) Access Network - LMDS, DLCs, RLC etc. Internet Exchange Points - IXP & Internet Data Centers (IDC) E-Commerc e 7.3.1 Information Technology With the convergence of technologies, catalyzed by the global IT revolution the world is witnessing change as never before in recorded history. In the realm of telecommunication, the change and the pace of it are more pronounced - from basi c telephony to voice, video and data services, and from bandwidth on demand to v irtual private networks, IT is making the entire plethora of BSNLs telecom serv ices expand. And, being rapidly implemented as the backbone for running customer -friendly services. FRS (Fault Repair System), DQ (Directory Enquiry), IVRS (Interactive Voice Respo nse System) and accounting and billing systems are already operational at BSNL. DOTSOFT , an integrated commercial & FRS package being inducted countrywide, to provide single window convenience. Telephone Directory on CD ROM and on the inte rnet. Infrastructure, technology and expertise for full service support to e-com merce enterprises. - 94 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 7.4 Social Commitment BSNL is committed to provide quality Telecom Services at affordable price to the citizens of the remotest part of the Country. BSNL is making all effort to ensu re that the main objectives of the new Telecom Policy 1999 (salient points indic ated below) are achieved. Access to telecommunications is of utmost importance f or achievement of the countrys social and economic goals. Availability of affor dable and effective communications for the citizens is at the core of the vision and goal of the new Telecom policy 1999. Strive to provide a balance between th e provision of universal service to all uncovered areas, including the rural are as, and the provision of high-level services capable of meeting the needs of the countrys economy. Encourage development of telecommunication facilities in rem ote, hilly and tribal areas of the country; Transform in a time bound manner, th e telecommunications sector to a greater competitive environment in both urban a nd rural areas providing equal opportunities and level playing field for all pla yers. - 95 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 7.5 Summary of financial statement - 96 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India The BSNL board has cleared the company's proposed $10-billion listing. If BSNL doe s manage to raise Rs40,000 crore by selling a 10% stake, the telco would be valu ed at Rs4,00,000 crore (around $100 billion). This will catapult BSNL into the l eague of top telcos in the world in terms of market cap. Incidentally, the marke t valuation of Bharti Airtel is just around $37 billion. Industry analysts had e stimated the BSNL to be valued at over Rs4,00,000 crore. The plan was to divest 10 per cent through the IPO. The valuation of Indias largest telecom company wa s estimated by analysts to stand at over Rs4,00,000 crore, larger than the combi ned market capitalization of Bharti Airtel Rs1,16, 342 crore and Reliance Commun ications (RCom) at Rs1,19,125 respectively the second- and third largest telecom companies. According to analysts, the $37-45 billion valuation is a fair one. BSNL has abou t 81 million subscribers, 10 million more than the country's largest private opera tor, Bharti Airtel, which is valued just over $38 billion. However, a top BSNL o fficial said that this was only the book value of the company and did not includ e its asset value. "If we include the asset value, BSNLs valuation is much high er. In financial yerar 2008-09, the company would invest about Rs15,000 crore to expand its mobile and broadband networks. The company has also committed to inv est about Rs60,000 crore by 2010 to expand its telecom infrastructure and operat ions - 97 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-8 8.1 Telecom Trends and High Growth Drivers General Outlook of communication services Communication services between people will continue to evolve as per their growi ng needs Richer communication stimulates all three drivers for growth:- new subs cribers, services & traffic In 2009 global data revenues will reach $189 billion of which 50% will be `richer communication' services Price pressure on voice servic es accelerates need for new revenues - 98 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India As voice becomes a commodity, service providers need new killer apps to boost AR PU and generate revenue across all customer segments. To deliver this, wireless operators need a well-balanced bundle of high-quality and attractive valueadded services, one of the keys to success in todays highly competitive telecommunica tions market. - 99 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India t han India is seeing phenomenal growth in wireless market and touching the 37% tele-d ensity at the end of March-2009 on the basis of unprecedented growth in wireless customers. Now the wireless market is on the growth trajectories of the busines s cycle in India, and there is significant portion of the population is still no t having the access to the service, the great growth is ahead in this sector. I - 100 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 2/3 of the Wo rld Population are not connecte 4G, Broadband Wireless and WiMAX technologies attracted nearly 1.5 million new s ubscribers last year, according to Maravedis, an analyst specializing in several sectors within telecoms. And quarter-onquarter growth reached a highly respecta ble 21%. "Total BWA/WiMAX revenues for 2008 totaled US$1.82 billion, compared wi th US$898.78 million in 2007 - a 102% annual revenue increase despite the econom ic downturn that began affecting operator revenues in Q308." - 101 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India To say that India offers potential is a complete under-statement. Approximately 70% of Indian households have no access whatsoever to fixed lines. Enter wireles s, enter broadband, enter WiMAX, to mention just a few to tap the untapped poten tial which is extra-ordinarily high. - 102 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India The WiMAX network will enable BSNL to offer enterprise customers high- bandwidth data communications services such as MPLS, VPN, leased line, and Internet acces s, as well as VoIP, telemedicine, e-education, e-governance, and e-commerce in r emote areas Internet access is still the big broadband driver in India, with wir eless broadband becoming the clear option owing to economics and ease of deploym ent - 103 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Different access technologies are available for implementation but all needs pro ject feasibility on revenue and profit terms. As India GDP will grow faster, per capita income will be increased and purchasing power of the Indian customer wil l be increased, and feasibility of high end premium product like fiber, VDSL2, L TE, HSPA, WCDMA, MBMS will be successfully launched which will change the patter n of Indian economy significantly. These technologies have tremendous potential to bring revolutionary effects. Now the companies are focusing on low cost servi ces to access the customers in rural India, and implemented the access technolog ies like ADSL, ADSL2+, Fixed WiMAX, EDGE, GSM, CDMA2000, EVDO to access the broa d rural market of India. - 104 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-9 Cost Efficient Operations and Rural Telecom Infrastructure Convergence Reaching and profitably serving low-income users is a big challenge for the mobi le industry in emerging markets. Service providers must focus on tight marketingoperational alignment, optimized network costs, flexible pricing and strong dist ribution networks. Consulting firm Ovums latest report outlines three aspects that operators must consider in serving low ARPU users. A close connection between marketing and net work operations is crucial to profitability in emerging markets, while different markets require different approaches and considerations. "A number of emerging market operators face significant operational challenges at least partly due to a disconnect between marketing and network operations. For example, several Afri can operators are being warned by regulators to tone down their marketing, as th e pace at which they are building network capacity cannot meet with the heavy fl ow of new customers," says Angel Dobardziev, Ovums Emerging Markets Practice Le ader. In the more sparse rural areas, such disconnect is more likely to produce the op posite challenge, which is an under-utilised network as a result of poor choice of coverage or inept marketing: "Successful operators bring marketing and networ k operations close together in targeting rural areas. With 70% of Indias popula tion in rural areas, for instance, a profitable rollout strategy there should fo cus on covering the most attractive rural communities first. Only then can a ser vice provider focus on driving up profitability through locally-focused promotio ns, public access phones and PCs to demonstrate the value of the services and ag gregate demand," says Angel Dobardziev. - 105 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 9.1 Optimized network operations Service providers must pay particular focus on four key areas when it comes to o ptimizing their networks for low Average Revenue Per Users (ARPU). They are: net work design and rollout; base station equipment and site costs; backhaul and tra nsmission; operational/business support systems (OSS and BSS). When designing network coverage for low ARPU areas, operators must take the oppo site approach to what is happening in mature markets, where switching at the edg e of the network is shifting towards the core, partly because backhaul is becomi ng cheap and plentiful. In low ARPU markets, the first principle is to have as few cell sites as possibl e. Each additional site generates incremental costs for equipment, site, securit y, transmission and power. More importantly, service providers must adopt distri buted network architectures, with base station clustering and local call switchi ng. - 106 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Does Best of Breed OSS adequately address the challenges of OSS in emerging market s? The Yankee Group commented in Unified OSS architecture is the critical underpi nning for automating the telecom service delivery factory, a commissioned work co nducted by Yankee Group Research on behalf of Clarity International, that: "With carriers focusing more on reducing opex and capex, a unified OSS solution provi des a compelling value proposition that ensures long-term viability. Unified OSS removes some of the bottlenecks associated with best-of-breed OSS solutions. - 107 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 9.2 Price to optimize network utilization Transparency and simplicity in pricing are essential for low ARPU users. Angel D obardziev explains: "operators must price their services to ensure optimum netwo rk utilization and profitability, in the same way that budget airlines generate their profits by ensuring higher aircraft utilization." The research suggests service providers should consider dealer commissions anoth er key lever in optimizing subscriber acquisition and retention costs in order t o ensure low ARPU customers remain profitable. "Some emerging market operators i n Asia and Africa have managed to reduce their dealer commissions to US$1, and e ven to agree that commissions would not be paid if the subscriber left the netwo rk within a certain period. This is an approach that operators need to consider for the next wave of low ARPU users, particularly those based in remote rural ar eas," says Dobardziev. 9.3 Shared access is a bridge to personal connectivity An effective local distribution network is one of the most critical components o f a service providers marketing efforts for low ARPU users. Carefully optimized selection, incentives and promotional support for the network of agents and air time resellers are an essential element of an operators marketing strategy. Typ ically, these users earn small sums of money frequently (often daily), and as a result top up their phones by small amounts more frequently. To these users, getting the phone initially is less a challenge than topping it up regularly, locally and in small enough amounts that they can afford. If there isnt an agent nearby to serve rural users locally, operators will be missing o ut on significant revenues. Meanwhile, service providers need to weave shared-access voice and data services into their marketing strategies, such as BSNL's Village Public Telephone, Bharti Airtels Public Call Offices and BSNL's Rural broadband package to Common Service Centre. - 108 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Flexibility in design keeps the scope of improvement and expansion. The operator should innovate in their retail outlet to comprise the existing capability to s erve the current services and if needed could adopt the future changes in servic e offerings, that reduces the cost and expedite the sales process of future serv ices. - 109 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India A comprehensive service delivery platform of B.S.N.L. to streamline and adopt th e rapid changes in telecom operations. Unified OSS focuses on simplification through pre-integration, consolidation of operational data and centralised workflow spanning end-to-end operational proces ses; from SLA management to field-force logistics. Frost and Sullivan in Market I nsight featuring OBCE Trends agree that: "This pre-integrated approach streamline s the rollout of an OSS deployment and yields greater out-of-the-box functionali ty. It avoids costly one-off, technology dependent solutions." - 110 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Today, there is a strong need to accept the challenges of rural communication co verage in emerging markets and win those challenges by concrete efforts of intel ligent solutions, lying in wireless technologies. wireless networks can be deployed rapidly. A GSM network, for example, can be de ployed and offering services within a matter of weeks, compared to the time need ed to deploy a wireline network. And wireless is extremely cost effective. With the highly competitive nature of the global wireless market, particularly in GSM , infrastructure costs are very low. Handset and terminal costs are also low - a nd are likely to fall further. The Ultra Low Cost Handset initiative driven by t he GSM Association is targeting the sub-US$20 handset, opening up the market to low-income users. Personal computer penetration levels in India have to be around 15 million throu ghout the country. WiMAX is the key to mass communication. There is huge potenti al for broadband wireless Internet and Voice-over-Internet Protocol (VoIP) servi ces in India because there are still more than 600,000 villages with no basic co mmunication means. It has to be said that one major obstacle looms in the way of widespread WiMAX rollout. Licence holders need to have at least 20 MHz of spectrum to support wide-scale d eployments and to build profitable businesses, but most currently have 12 MHz or less. Urgent and radical measures are required. Government agencies are now in discussion with telecoms companies. If the national Department of Defence releas es some of its spectrum to civilian operators, there could be more spectrum avai lable. 9.4 Indias WiMAX subscribers to top 13 million by 2013 Deployment of 3G and WiMAX streams will generate a reasonable user base over the next five-year period. While the global economy is lying dormant, demand for te lecommunications services in India continues to fuel significant growth in the s ector. According to research firms Maravedis and Tonse that in 2008, approximate ly 10,000 BWA/WiMAX base station sectors were deployed in total. Currently there are about 300,000 BWA/WiMAX subscribers already using these services. - 111 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India In the next six years India has the potential to become one of the top broadband wireless markets on the planet. The resulting ecosystem and opportunities will m ake India a dream destination for vendors and investors. Tonse Telecom CEO, Sridh ar Pai. For the severely under-served Indian broadband market, demand for wirele ss broadband connectivity continues across all sectors: retail, SOHO, SMEs and l arge enterprises alike. India is expected to see the worlds lowest end-to-end c ost for WiMAX services, with costs driven down faster than in any other market. Computer penetration is still very low and the Indian telecom sector operates in a volume-driven market and innovative business models such as public-private pa rtnerships will emerge, together with low cost devices and a vibrant ecosystem. B.S.N.L. was initially a wire line operator and later came into wireless market. Wire-line business is a capital intensive field with long break-even time. Its operational margins are being hit by higher cost of its operation. With the impl ementation of 4G, WiMax technology and by going wireless it can improve on margi n front and expand its business rapidly. Prior presence in rural market, can giv e it an edge to launch its operations rapidly, using these new technology, and b eing a niche player in all front. - 112 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-10 The Role of Public & Private Players in Indian Telecom Secotor NTP-99 laid down a clear roadmap for future reforms, contemplating the opening u p of all the segments of the telecom sector for private sector participation. It clearly recognized the need for strengthening the regulatory regime as well as restructuring the departmental telecom services to that of a public sector corpo ration so as to separate the licensing and policy functions of the Government fr om that of being an operator. In this process, B.S.N.L. formed from DoT being a public sector telecom operator. After this a number of private players have been emerged and invested heavily in the Indian telecom sector. We can name few majo r operators as Airtel, Vodafone, Reliance, Idea, Tata Teleservice. Both public a nd private players have contributed significantly in the Indian telecom growth. Here we take the case of largest public sector telecom operator, B.S.N.L. and la gest private sector telecom operator, Airtel, for the comparison of their perfor mance in telecom sector. - 113 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India From the above graph we can see that private players are playing a significant r ole in the churning out the customer base in Indian wireless market. Airtel has largest subscriber among all players and B.S.N.L. is at the forth place in custo mer market share. Airtel has added 31.94m customer in 2008-09 in comparison to B .S.N.L's 12.3m, around 2.5 times more. Airtel being a private player is outpacing the public sector enterprises, and thus fulfilling the objectives of NTP-99. B.S .N.L. Customer Market Share percentage is shrinking year by year, due to private players aggressive growth. - 114 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 10.1 Airtel as a private telecom service provider - 115 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 10.1.1 Airtel Performance Indicator - 116 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 10.1.2 Airtel Segment investment and contribution - 117 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India The fierce competition between the operators in India is dragging the ARPU to th e lower side which is affecting the bottom level of companies financial. To subs idize the effect, the operators have to churn out the customers rapidly. Airtel has maintained his financial growth despite lowering ARPU with increased volume of customers. Airtel is beating all the expectation and has been evolved as a st rong player in Indian telecom arena. It is showing the example for the others to follow. - 118 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 10.2 10.2.1 Performance parameters of BSNL FINANCIAL PARAMETERS : : Rs.357.53 Rs.281.12 1. Billed /Del/Month (Basic services)(upto March 2008) 2. Billed /Cell/Month (Ce llular) (upto March 2008) 10.2.2 1. Fixed 2. GSM 3. WLL MARKET SHARE : : : (Based on Figures of Private Operators provided by ERU Cell of DOT) (BSNL/(PSU+PVT.) = 31297816/39209432 ( 79.82%) = 36683137/199182293 (18.41%) =45 79023/70117895 (6.53%) 4. OVERALL MARKET SHARE): (BSNL/(PSU+PVT.)) =72559976/308509620 (23.51%) B.S.N.L. lowering ARPU is affecting the financials of the company and year on ye ar its margins of profit is shrinking and very dismal growth in revenue front. A ll these are due to slow growth in customer addition, and poor operational effic iency. - 119 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Billed Amount (Pre-paid + Post-paid) Previous to previous Month Previous Month Current Month 900000 800000 700000 600000 Rupees in thousands 500000 400000 300000 200000 100000 0 ) L aj K H uj P g B rs ih d N ol m j ) r - I - II P tk N rl P A K T K Chn Pn H a H P( E P(W UA R & M G M C h W O B h k A& K As N E NE J J U U - 120 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Outstanding Amount Previous to Previous Month Previous Month Current Month 900000 800000 700000 600000 Rupees in thousands 500000 400000 300000 200000 100000 0 P nj ar H ) ) HP P(E (W P U U L UA aj R J & K M H G uj M P hg C B W rs O Bi h kd &N Jh A l Ko Asm NE -I II EN AP k Kt TN l Kr hn C - 121 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Outstanding per Postpaid Subscriber Previous to Previous Month Previous Month Current Month 12000 10000 8000 Rupees 6000 4000 2000 0 j Pn r Ha P H ) E) P( P(W U U UA L j Ra J & K M H G uj P M g Ch W B rs O d h N B i Jhk A& l m E-I -II Ko As N NE P A tk K TN rl K n Ch - 122 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India ARPU (Pre-paid + Post-paid) Previous to previous Month Previous Month Current Month 450 400 350 300 Rupees 250 200 150 100 50 0 Asm NE-II A&N MH UAL MP Bih Pnj Raj Guj Kol AP Jhkd Chg Krl HP

J&K UP(E) UP(W) - 123 By- Neeraj Kumar Singh (Roll No- 520751161) NE-I Chn Ors Ktk Har WB TN

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Average Revenue per DEL per month (Rs.) February 2009 Achievement Name of the Unit A&N A.P. ASSAM BIHAR JHARKHAND GUJARAT HARYANA H.P. J. & K. KAR NATAKA KERALA M.P. CHHATTISGARH MAHARASHTRA N.E.-I N.E.-II ORISSA PUNJAB RAJASTH AN TAMIL-NADU U.P.(EAST) U.P.(WEST) UTTRANCHAL WEST BENGAL CALCUTTA CHENNAI Tota l Target Curr. Yr. 491 416 448 385 459 400 388 304 542 512 350 334 396 435 410 4 94 356 332 373 434 301 451 425 320 499 577 407 Current yr. 28.02.09 369.88 317.4 4 280.07 287.72 338.93 306.06 307.48 226.96 337.42 352.12 269.93 256.67 307.73 3 66.89 244.28 159.19 220.29 260.27 244.46 315.88 227.94 358.27 322.72 208.75 410. 53 438.18 304.68 Last Yr. 28.02.08 439.75 372.01 376.41 380.86 390.94 349.08 349 .00 266.74 423.19 438.51 326.06 292.15 344.88 397.75 361.38 399.32 275.89 300.20 316.76 402.95 230.96 412.18 372.19 267.03 449.48 531.76 361.00 Variation from l ast year (Rs.) -69.87 -54.57 -96.34 -93.14 -52.00 -43.02 -41.52 -39.78 -85.76 -8 6.39 -56.13 -35.47 -37.14 -30.86 -117.10 -240.13 -55.60 -39.93 -72.30 -87.07 -3. 02 -53.91 -49.47 -58.28 -38.95 -93.57 -56.32 Variation from last year (%) -15.89 -14.67 -25.59 -24.45 -13.30 -12.32 -11.90 -14.91 -20.27 -19.70 -17.21 -12.14 -1 0.77 -7.76 -32.40 -60.14 -20.15 -13.30 -22.83 -21.61 -1.31 -13.08 -13.29 -21.83 -8.66 -17.60 -15.60 ARPU in Descending order CHENNAI CALCUTTA A&N MAHARASHTRA U.P.(WEST) KARNATAKA JHARKHAND J. & K. UTTRANCH AL A.P. TAMIL-NADU CHHATTISGARH HARYANA GUJARAT BIHAR ASSAM KERALA PUNJAB M.P. R AJASTHAN N.E.-I U.P.(EAST) H.P. ORISSA WEST BENGAL N.E.-II Total 438.18 410.53 3 69.88 366.89 358.27 352.12 338.93 337.42 322.72 317.44 315.88 307.73 307.48 306. 06 287.72 280.07 269.93 260.27 256.67 244.46 244.28 227.94 226.96 220.29 208.75 159.19 304.68 - 124 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Status of Collection Efficiency Descending Order as on February 2009 Target ---> 99.00% Target ---> 97.00% Target ---> 90.00% Circle CHENNAI KERALA TAMIL-NADU KARNATAKA PUNJAB A.P. GUJARAT UTTRANCHAL RAJAST HAN H.P. MAHARASHTRA WEST BENGAL CALCUTTA J. & K. U.P.(WEST) HARYANA ORISSA M.P. A&N CHHATTISGARH U.P.(EAST) ASSAM JHARKHAND N.E.-I BIHAR N.E.-II Total 6th Month 98.79 98.74 96.62 96.45 96.39 95.84 95.13 94.66 94.04 93.42 93.30 92.7 5 92.61 91.49 91.47 90.90 90.43 89.77 89.28 87.92 84.31 84.17 81.77 72.21 64.71 60.42 93.62 Circle N.E.-II CHENNAI KERALA GUJARAT PUNJAB TAMIL-NADU KARNATAKA A.P. MAHARASHT RA U.P.(WEST) CALCUTTA UTTRANCHAL HARYANA RAJASTHAN H.P. ORISSA J. & K. M.P. A&N WEST BENGAL CHHATTISGARH U.P.(EAST) N.E.-I ASSAM BIHAR JHARKHAND Total 3rd Month 154.08 97.42 96.97 96.26 94.92 94.58 94.57 93.82 93.48 93.28 92.57 91. 33 89.67 88.45 88.03 87.89 85.10 84.89 84.71 83.50 81.96 76.73 70.67 69.06 68.07 63.55 91.36 Circle CHENNAI GUJARAT KERALA TAMIL-NADU PUNJAB KARNATAKA CALCUTTA MAHARASHTRA A .P. RAJASTHAN H.P. UTTRANCHAL HARYANA U.P.(WEST) ORISSA A&N M.P. CHHATTISGARH WE ST BENGAL U.P.(EAST) ASSAM J. & K. N.E.-I JHARKHAND N.E.-II BIHAR Total 2nd Month 96.57 95.37 94.88 92.39 91.52 91.43 91.35 91.19 91.08 90.88 90.46 88.8 5 86.03 85.75 83.58 81.77 81.71 81.27 77.71 73.75 73.36 73.35 59.02 56.59 40.76 27.79 88.69 - 125 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Collection Efficiency of top 3 circles as on 28.2.2009 6th Month Target -> 99% CIRCLE Chennai Kerala Tamilnadu C.E. (%) 98.79 98.74 96. 62 3rd Month -> 97% CIRCLE Chennai Kerala Gujarat C.E. (%) 97.42 96.97 96.26 CIR CLE Chennai Gujarat Kerala Target 2nd Month 90% C.E. (%) 96.57 95.37 94.88 Targe t-> Collection Efficiency of lowest 3 circles as on 28.2.09 6th Month Target -> 99% CIRCLE NE-I Bihar NE-II C.E. (%) 72.21 64.71 60.42 3rd M onth -> 97% CIRCLE Assam Bihar Jharkhand C.E. (%) 69.06 68.07 63.55 CIRCLE Jhark hand NE-II Bihar Target 2nd Month 90% C.E. (%) 56.59 40.76 27.79 Target-> As per Auditor General of India report, the total arrears of revenue is over Rs4 030.51 Crore at the end of June-2007 in respect of telephone and telegraph servi ces which will have adverse impact on the financial health of commercial underta king like B.S.N.L.. - 126 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 127 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Indian Telecom market is a big cake and both public and private can share it. Bo th have to come forwarded to fulfill the aspiration of India's telecom services ne ed and a great impact of this will lead India to the new sunny horizon of prospe rity. Its financing need is too big that government can't alone do the magic. Magi c lies in public-private partnership, and this is evolving the better picture of India. - 128 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-11 Telecom Investment opportunities and Potential In India 11.1 Opportunities India is the fifth largest Telecom services market in the world; US$23 billion r evenues in FY 2007. Industry grew by about 22% in FY 2007 over FY 2006, 290 mill ion subscribers - 39 million fixed lines and 251 million wireless - (February 20 08). The telecom subscriber base has grown at about 40% p.a. over the last 4 yea rs. Wireless segment subscriber base grew at 62% p.a. . The Indian telecom marke t has both public and private sector companies participating. Public sector has over 27% subscriber market share, down from over 90% in 2000 & Private companies have added subscribers at a CAGR of 80% since 2000. Mobile operators have deplo yed both CDMA (62 million users) and GSM (189 million users) wireless networks ( February 2008). Value added service features constitute about 10% of revenue (2% in 2001). In India 74% to 100% FDI is permitted for various telecom services. FIPB approva l is required for foreign investment exceeding 49% in all telecom services. 100% FDI is permitted in telecom equipment manufacturing India has a telecom policy that aims to encourage private and foreign investment. Highlights are An indepen dent regulator the Telecom Regulatory Authority of India (TRAI). Revenue-share m odel for licenses issued by the Government for telecom services in India. Unifie d access licenses are available for providing telecom services on a pan-India ba sis in both, GSM & CDMA technologies. Government has simplified NLD and ILD lice nse norms and lowered entry barriers. New entrants given 3 years to set up infra structure. Entry fee and net worth requirements have been reduced. Policy on Mob ile Number Portability (MNP) & 3G to be announced shortly. Policy on Active Infr astructure Sharing to be announced shortly. Universal Access Service License (UA SL) recently issued to 5 new players. - 129 By- Neeraj Kumar Singh (Roll No- 520 751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India India is expected to be among the fastest growing telecom markets in the world, projected growth of 27% p.a. to reach 500 million subscribers by March 2010. Ove r 8 million new users are added every month mostly in wireless 11.2 Potential Favourable demographics and socio-economic factors leading to high growth: Growt h of disposable income combined with changes in lifestyle Increasing affordabili ty - low tariffs, easy payment plans and low-cost handset Increased coverage and availability of mobile services Investment opportunity of over US$76 billion across many areas: Network infrastr ucture to increase service coverage Roll-out of additional network for 2G, 3G, W IMAX etc. Applications/software for voice, data and broadcasting services Device s like the mobile handset, set top box, modem, gaming console, and consumer prem ise equipments etc. Nokia, Siemens, Alcatel, Lucent, Elcoteq, LG, Ericsson are a ll investing in India - 130 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 11.3 Investment Facilitation Agencies 11.3.1 Foreign Investment Promotion Board (FIPB) The FIPB is a specially empower ed board chaired by the Secretary, Ministry of Finance (MoF), set up specificall y for expediting the approval process for foreign investment proposals. There ar e no prescribed application forms for applying to FIPB, except in the case of pu rely technical collaborations. Proposals for FDI may be sent to the FIPB unit, D epartment of Economic Affairs, Ministry of Finance or through any of India's diplo matic missions abroad. The government has introduced a mailbox facility for acce pting FDI proposals through the Internet and providing an acknowledgement number for these, with the condition that a hard copy should be received in original b efore the proposal is considered by the government. 11.3.2 Foreign Investment Implementation Authority (FIIA) The Government of Indi a has set up FIIA in the Ministry of Industry and Commerce to facilitate quick t ranslation of FDI approval and implementation. The organisation also provides a proactive one-stop, after-care service to foreign investors by helping them obta in the necessary approvals, sort out operational problems and meet various gover nment agencies to find solutions to problems and maximize opportunities through the partnership approach. FIIA, in accordance with its mandate, assumes the foll owing role: U nderstands and addresses concerns of investors U nderstands and ad dresses concerns of approving authorities Initiates multi-agency consultation Re fers matters not resolved at the FIA level to higher levels on a quarterly basis , including cases of project slippage on account of implementation bottlenecks 11.3.3 Investment Comision (IC) The three-member Investment Commission, set up i n the Ministry of Finance in December 2004 by the Government of India, has Mr. R atan Tata as Chairman and Mr. Deepak Parekh and Dr. Ashok Ganguly as members. Th e Investment Commission advises the Government of India on changes in policy and procedures that will enhance investment in India, recommends projects and inves tment proposals that should be fast tracked/mentored and promotes India as an in vestment destination. - 131 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 11.3.4 Secretariat for Industrial Assistance (SIA) The SIA, functioning with the Department of Industrial Policy and Promotion, Ministry of Commerce and Industr y, acts as a gateway to industrial investment in India. It provides a single-win dow clearance for entrepreneurial assistance and facilitates the processing of i nvestors' applications requiring government approval. 11.3.5 India Brand Equity Foundation (IBEF) IBEF collects, collates and dissemin ates comprehensive information on India. The website, www.ibef.org has been deve loped as a single-window resource for in-depth information and insight on India. IBEF also produces a wide range of well-researched publications focused on Indi a's economic and business advantages. - 132 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-12 Methodology This chapter will cover the methods we have used in this project. We will descri be chosen methods, how the work has been carried out to answer our purpose, data collection methods. Additionally, methodology problems that have come up during the process will be presented. Motivations and justifications for all adopted m ethods will also be given. 12.1 The road to answering our purpose The problem formulation process has been iterative, from looking at one problem from a certain view to another. We began to look for the Indian telecom reforms for fulfilling the communication needs of Indian people, in the perspective of t he vision seen by the government of India, and effect of these reforms on the so cio-economic growth. We have found the relations that showed a connection betwee n telecommunication and poverty reduction thus making it more interesting for us to investigate the relationship between telecommunication and how to finance it more innovative. To be able to do this we have searched for information in lite rature and articles that reflects this topic, which has helped us getting a theo retic foundation. The empirical material of this project consists of survey data collected by different research firms, World bank report, and government of Ind ia economic reports, have been taken into consideration as a secondary data to b ring out some conclusions. The telecom vendor's presentations on the growth trends and future turnings have been taken to analyze and find out the area of investm ent for complementing the purpose of financing. Public company, BSNL and private company Airtel, financials available in the public domain have been taken into consideration to analyze the success of public-private route of investment in In dia. How much the telecom investment opportunities in India is, to find out this , we have searched and analyze the government of India's public domain information and statistics. We have gone through many telecom manuals, telecom analyst `s vie ws & consulting agencies papers in internet domain to collect the data related t o telecom growth figures, estimate figures, future trend, financing trend, reven ue figures, investment figures etc. - 133 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 12.2 Data collection methods Data can be collected in different ways depending on if it is primary- or second ary data that is to be collected. To achieve the data necessary to accomplish th e purpose of this project mainly secondary data has been collected through mainl y internet domains, government's reports and literature on the subject, articles i n newspaper and magazines etc. 12.2.2 Secondary data Problems can however occur, as it can be difficult to find relevant material. It can also be difficult to value the quality and usefulness of the found material. Example of secondary data are information that are docum ented in books, articles, tape recordings and information that are available in other electronic forms, like internet. . The secondary data in this project are government of India telecom growth figures, investment estimate, social and econ omic indicators, estimates of consulting firms, World bank reports, companies fi nancials, Telecom statistics of different research analysts. 12.3 Source critique When you are using secondary data it is important that you have a critical behav ior to the literature. The main reason for this is that many articles are writte n by personal reflections. To avoid this kind of information our ambition is to have as much scientific literature as possible. But we have also used other sour ces to learn more about this subject. - 134 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-13 Analysis Access to modern communications is a basic requirement for economic growth and s ocial harmony. As an example, so important are communications deemed that the In dian Government, in drawing up a list of the ten key goals for national growth, put communications on a par with water and energy in terms of importance. That a ccess to communications is an essential precursor for economic activity and grow th is not in dispute. In studies carried out by the International Telecommunicat ions Union (ITU) it was found that just the simple provision of a public pay tel ephone box in a remote village which previously had no communications with the o utside world stimulated economic activity, increased employment and created new wealth. Unfortunately, some twenty five years after the Maitland Report for the United Nations identified the importance of ensuring universal access to communi cations, the problem has remained largely unresolved. In many regions of the wor ld, such as Africa, India, China and South America, there are still large number s of people who do not have this access: indeed there are probably hundreds of m illions of people who have not even seen or used a telephone. This gap between t he telecommunications haves who have easy access to services such as the Internet and the telecommunications have nots who do not, has been dubbed the digital divide and until comparatively recently no viable solutions to bridging this divide pre sented themselves. 13.1 The benefits of wireless The reason that so many people remain unconnected to any kind of communications network is simple. The cost and effort required to deploy traditional copper or fibre cable networks to remote rural areas would be astronomical and would take many decades. The lack of existing infrastructure, particularly electrical power , makes such a task almost impossible. With wireless technology these problems a re easily resolved. Wireless networks have the capability to cover large areas, regardless of the type of terrain, without the need to lay cables. Wireless base stations can be self-powered by a variety of methods. And there is no need to p rovide an individual wired connection to each household, anyone within the cover age area of the base station with a suitable terminal can gain access to modern digital voice and data communications services. - 135 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Most importantly, wireless networks can be deployed rapidly. A GSM network, for example, can be deployed and offering services within a matter of weeks, compare d to the time needed to deploy a wireline network. And wireless is extremely cos t effective. With the highly competitive nature of the global wireless market, p articularly in GSM, infrastructure costs are very low. Handset and terminal cost s are also low - and are likely to fall further. The Ultra Low Cost Handset init iative driven by the GSM Association is targeting the sub-US$20 handset, opening up the market to low-income users. Wireless has proved its case beyond doubt. I n the 25 years since the first cellular phone call was made, the global cellular market has grown to almost three billion, representing around half of the world's population. And growth continues apace. Developments in wireless technology hav e produced an evolution from analogue cellular, to digital cellular with the adv ent of GSM, and now the wireless world is moving towards IP (Internet Protocol). 13.2 Delivering service to customers A number of key elements need to be in place for operators to provide communicat ions to the havenots. Most importantly, wireless services must be affordable as in comes are usually low in lesser developed markets. Low-cost handsets are essenti al and, as has already been indicated, this is being addressed by the global wir eless industry through the Ultra Low Cost Handset initiative. Similarly, operato rs must be able to deploy their networks cost-effectively, and operational costs must be kept to a minimum. Often the business plans which work for operators in mature markets are not appropriate and considerable thinking outside the box is r equired. Operators such as Bharti Telecom in India, where average revenue per us er (ARPU) is less than US$5 a month and falling, have set the pace with innovati ve ideas such as electronic topping up. And yet operators in lesser developed ma rkets must also look to the future. In the early days of market growth, basic ha ndsets offering simple voice and text messaging will meet the communications dem ands of their customers but very rapidly these demands will change. Subscribers will no longer be satisfied with basic communications: they will be looking for more advanced data and multimedia services. A further development will be the de mand for personalisation, which is already occurring in mature markets. The mobi le phone has become the world's most ubiquitous personal item. Many people would r ather leave home without their wallet than without phone. With such a strong con nection it is inevitable that the owners of mobile phones want to personalise th em for their own individual requirements, not just in regard to simple things su ch as ring tones and wallpaper, but beyond that with applications such as person al service menus which cover all the applications and services which they need t o fit with their individual lifestyles. - 136 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Operators in mature markets are already responding to this shift in demand and a re offering an increasing range of services and applications which the end user can adapt and modify to his or her requirements. The demand for personalisation will soon be a factor which operators in lesser developed markets will have to a ddress. The big question for all operators is which wireless technology from the ever-growing range on offer is most appropriate for the delivery of advanced se rvices and applications. 13.3 Technology choices The reality is that in order to meet the demands of their customers for an everwidening range of advanced services, operators will need to deploy a mix of wire less technologies, each having its own specific applications. The most ubiquitou s wireless technology is cellular radio which over the last fifteen years has un dergone a transformation. From its introduction in 1991 GSM has evolved from del ivering voice and basic text messaging through GPRS, which first introduced pack et switching, to 3G/UMTS, which offers the first truly capable data communicatio ns capability. The next evolution will be to HSDPA and HSUPA which will deliver wire line data throughput speeds in both the uplink and downlink. Germany is one of the countries leading the evolution to High Speed Packet Access (HSPA), the term used to describe the implementation of both HSDPA and HSUPA. T-Mobile is de ploying Siemens HSPA technology to deliver high speed data services to its custo mers in Germany and Austria. Vodafone in Germany is also introducing mobile broa dband services at DSL speeds using Siemens HSPA solutions. The service, dubbed UM TS Broadband, will initially be offered in Dusseldorf, Frankfurt, Hanover and Mun ich. Both the T-Mobile and Vodafone services will deliver download speeds of 1.8 mb/s, a significant improvement on the 384kb/s currently available. Cellular tec hnologies offer many benefits to operators looking to deliver personalised servi ces to their customers. Above all cellular provides the key benefit of mobility, that ability to make and receive calls wherever you are and whenever you want. Another key benefit is global roaming which extends mobility from the user's home network to any other GSM/3G network worldwide. Today, for example, GSM users can use their phone in more than 130 countries. And, of course, the global market p lace behind GSM and the technologies that build on GSM ensure the availability o f a massive range of costeffective mobile phones. - 137 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 13.4 Enter WiMAX Cellular alone, however, may not be the answer to delivering the right service m ix and operators need to look at other wireless technologies as well. The altern ative wireless technology attracting the most interest these days is WiMAX (Worl dwide Interoperability for Microwave Access). WiMAX is a standards-based wireles s technology for providing high-speed, last-mile broadband connectivity to homes and businesses and for mobile wireless networks. WiMAX is based on the IEEE 802 .16-2004 specification for wireless high-speed Internet access promoted by the W iMAX Forum. WiMAX offers a wireless alternative to cable and DSL broadband acces s. It can be deployed as a wireless last mile solution for fixed and mobile operat ors planning to deliver wireless DSL services to rural and remote areas where pr oviding services by cable or fibre is difficult or uneconomic. The WiMAX specifi cations have now been evolved to support nomadic users and a new standard is bei ng defined for mobile WiMAX users. Operators need to evaluate their technical op tions as the best solution will nearly always be a mix of different technologies which together deliver flexible solutions which meet user's needs. 13.5 Looking to the future The global wireless industry is constantly looking to the future, working to dev elop the next generation of wireless technology. As developing a new radio inter face can take up to ten years it is obvious that, even as 3G reaches maturity an d alternative solutions such as WiMAX become more widely deployed, work is alrea dy ongoing to create the next generation. Although there is still much detailed R&D still to be carried out, the overall picture of what will come beyond 3G in the 2010/2012 timeframe is already clearly outlined. Within the next few years m obile networks will move away from having a core network accessed through a sing le air interface. Instead mobile networks will have multiple wireless accesses c onnected via a unified multimedia IP network. The access networks connected to t he common core will include 3G, WLAN, WiMAX, GSM/GPRS/EDGE, as well as fixed net works such as ISDN and DSL. This flexible approach will enable operators to use combinations of different access technologies to deliver a service mix which wil l be unique for each customer. And all this without burdening the user with any details of the technologies involved intelligence in the network and devices wil l hide these complexities from the consumer. Already operators are planning to u se a mix of cellular and WiMAX technologies to deliver services and this trend w ill accelerate as the wireless world moves towards its future vision. - 138 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 13.6 Streamlining Telco's process efficiency Most operators in emerging markets must contend with comparatively low ARPU. The estimated ARPU in India is around US$8 per month; only slightly lower than Indo nesia, the Philippines, Malaysia, Thailand and China and around a tenth that of some Western European operators. This low ARPU is offset by potential for custom er growth. For operators in emerging markets the key is in accessing their large , often rural populations that typically have low tele-density, thus supporting business models based on rapid growth and high customer subscription. For exampl e, India covers 3 million km2 and 70% of the 1.1 billion population lives in rur al areas with tele-density of around 2%. While the opportunity for customer grow th is clear, automation and intelligent management of manual activities, leading to operational efficiency, are critically important when maintaining services o ver such a geographical extent. Some operators in Asia are achieving ratios of s taff to subscribers that are almost half that of counterparts in Western Europe and North America; one Indian operator is achieving a ratio of 1:1750. This is b eing achieved initially through rapid growth in subscribers but to sustain this and turn it into operational efficiency operators look to their OSS to automate and manage the end-to-end operational processes. Operators in Eastern Europe and CIS are challenging their legacy platforms as they experience demand for broadb and services. OSS Observer (Emerging Markets Outlook, February 2008) forecasts t hat residential broadband will grow faster than revenue, at a CAGR of 27%, as th e service is still relatively new, and ARPUs are low. Simply put, the legacy OSS cannot efficiently, rapidly and reliably deliver the order-to-cash process, des pite network availability and a consumer base demanding higher value services. M any operators are replacing legacy with new OSS, often delivering many functions simultaneously. Operators in emerging markets are using Unified OSS to achieve end-to-end process efficiency and automation without facing the costs and time-s cales of Best of Breed OSS. 13.7 Growing pains In emerging markets, an OSS must take the strain of a rapidly expanding customer base, as this off-sets low ARPU. Expansion can be extremely rapid; some operato rs in emerging markets achieve tens of millions of subscribers within a few year s, monthly growth of one million subscribers being fairly common. Where the subs criber base already exists, as in Eastern Europe, the OSS must support consumer demands to rapidly transition from low to high revenue services. Operators in emerging markets need OSS that helps them go live with services quick ly and manage the transition from low to high revenue services. This rapid incre ase in subscriber numbers or service revenue is often essential for the business plan. This is doubly important because operators in emerging - 139 By- Neeraj K umar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India markets have often invested heavily in infrastructure and strive for high utiliz ation through customer growth to balance costs. One emerging market operator est imates that the right choice of OSS saved around US$200 million in life-time int egration costs and delivered sophisticated OSS functionality two years earlier, when compared to Best of Breed OSS. Within seven months of starting up, they were the country's largest mobile operator. Subscribers in emerging markets are technol ogy-literate and competition is relentless, throughout this intense growth perio d. Once again taking this Februarys OSS Observer as the source, competition is a major reason why India has some of the lowest mobile rates in the world, at tw o cents per minute. The need to defend market share and capture new subscribers drives innovation in service offerings. In addition to coping with demands of gr owth, the OSS for emerging markets must reduce time-tomarket for new products. D emands for 12-15 new products and features per year for mobile service providers in emerging markets are not unheard of and are being supported by Unified OSS t oday. 13.8 Next-generation technologies For many developing countries, next-generation technologies are not a long-term aim, but a starting point, since they can solve many problems facing operators. Various operators in emerging markets are building broadband optic fibre network s, completely bypassing the copper lines still used in many developed countries. In just a few years, India-based Reliance Communications has become the world's l argest IP-enabled optic fibre-cable network with 230,000 km now laid. Compared t o copper cable, optical fibre provides far more bandwidth, while being cost comp arable and less subject to theft. Instead of deploying copper or fibre, many cou ntries are deploying wireless coverage to provide an instant broadband service. Wireless broadband is an excellent means of reaching rural or transient populati ons and coverage black spots. Unlike copper cable, wireless broadband equipment ca n be secured against theft and removes much of the cost of laying and maintainin g hundreds of kilometres of infrastructure. One shared characteristic of most em erging markets is that they are a hive of innovation and experimentation. In Ind ia 3G and CDMA2000 are currently capturing public interest, but this may be chal lenged by WiMAX and technologies such as PLC which continue to exploit niche opp ortunities. Operators in emerging markets should be wary of equipment vendors "giving away" their equipment and technology-aligned management solutions. Instead they should consider longer term use of flexible, multi-technology and multi-vendor OSS pla tforms, providing holistic network management, futureproofing for evolution and customer centric perspectives, as is provided by Unified OSS. - 140 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 13.9 Public-Private Investment India has had the most success attracting more private investment in infrastruct ure in 2006 than any other developing country. Long-standing policies in most ot her South Asian countries are beginning to bear fruit as well. Nevertheless, del ivering the infrastructure services needed to sustain and accelerate growth in S outh Asia remains a major challenge. Estimates suggest that closing the gap in s ervice provision and meeting future needs will require infrastructure investment in the range of 78 percent of GDP a year. The private sector can do more to help close the region's infrastructure service deficit. But first, the region's governme nts will need to close the infrastructure policy deficit, manifested in many sec tors in distorted pricing, poor governance and accountability, and weak financia l and operational performance. Telecommunications accounted for 64 percent of in vestment commitments to infrastructure projects with private participation in So uth Asia in 200106, a big increase over its 39 percent share in 1996 2000. This la rge and growing role of telecommunications is much like the overall trend for de veloping countries. But the trend in South Asia is somewhat more extreme. India has seen the most dramatic growth in private investment in telecommunications. - 141 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India India has attracted most of the investment commitments to infrastructure project s with private participation in the region. This is not surprising, as India is by far the region's largest economy. But it has also made the broadest and most su stained efforts to attract investment. Thanks to the success of its reforms in t ransport and telecommunications, India attracted more investment commitments to infrastructure projects with private participation in 2006 than any other develo ping country. Indeed, commitments in India were nearly twice those in its neares t rival, Brazil, and well ahead of those in China. Estimates from a World Bank study suggest that annual GDP growth of 7.5 percent would lead to annual investment needs of about 5 percent of GDP to meet the incr eased demand for infrastructure services along with another 2 percent of GDP for capital replacement. India is in the global arena for increased foreign investm ent - both through the Equity markets - termed Foreign Institutional Investment (FII) and Foreign Direct Investment (FDI). While its size and growth potential m ake India attractive as a market, the most compelling reason for investors to be in India is that it provides a high return on investment. India is a free-marke t democracy with a legal and regulatory framework that rewards free enterprise, entrepreneurship and risk taking. Over 300 million Indians (63 million household s) are expected to have a household income of over US$6,000 by 2015 (over US$30, 000 in PPP* terms). India is experiencing a rapid growth in consumer spending. T he economic reforms since the early nineties have unleashed a new entrepreneuria l spirit creating a vibrant economy supported by rising per capita income. Fastgrowing disposable incomes, increased availability and use of consumer finance a nd credit cards complement the keenness of the average Indian to adapt to and as similate global trends. This has led to the creation of a rapidly growing - 142 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India consumer base and one of the world's largest markets for manufactured goods and se rvices. Growth in key sectors like infrastructure, services and manufacturing co ntinues at about 10-12% p.a. 13.10 World telecoms and IT outlook FROM THE ECONOMIST INTELLIGENCE UNIT Global IT spending will continue to outpace global economic growth over the five years to 2011 as companies continue to upgrade their corporate networks worldwi de. Primary drivers will include the increased demand from small and medium-size d enterprises, particularly in Asia; continued network equipment and service upg rades across the business sector; and steady demand from both the corporate sect or and consumers for innovative, converged electronic devices with Internet acce ss. Sales growth of the PC will slow over the forecast period. From strong doubl e-digit figures of the past few years, global PC shipments will grow by just 4.3 % per annum between 2007 and 2011, according to IDC, the US IT consultancy. This growth will be driven by emerging markets and Western Europe where penetration levels are lower. Purchasing and owning a mobile phone will continue to be a wor ldwide obsession, but the rate of growth will moderate from nearly 10% this year to 5% in 2010, according to Pyramid Research, a US telecom consultancy. Average revenue per subscriber will decline in the period, as operators compete more ag gressively for customers on price. Worldwide demand for broadband internet conne ctions will grow in double-digits the next five years for the world's sixty larges t economies to 585m subscribers by 2011. Revenues from broadband services will l eap from US$137bn this year to US$207bn in 2011, accounting for nearly 40% of to tal fixed line revenue worldwide, according to Pyramid. - 143 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Price competition will remain keen in the years ahead. The sector's ability to kee p costs low through global sourcing as well as ruthless attention to supply-chai n efficiencies and economies of scale should, however, stem severe profit erosio n for the most efficient players. On the demand side, the increased popularity o f on-demand, online services as opposed to traditional software with its endless upgrades will offer continued opportunities for innovative start-ups. Web 2.0 in itiatives, which create a platform for collaborative, online work environments, will gain traction in a wider circle of industries. The IT and telecom sectors' dr ive to innovate will continue to be backed by its strong commitment to research and development (R&D). As a result, companies will continue to launch tempting n ew products for both the business and consumer market. Some will be tied to glob al issues, such as the environment. Rising concerns about the impact of air trav el, for example, will convince more managers to trade in their carry-on luggage for the latest video conferencing systems. The vast majority will be web-linked products and services, ranging from internet radios to Internet Protocol TV (IPT V) and mobile phones equipped for banking, TV and social networking. Sales of th ese goods will dampen the growth in demand for the traditional PC, as traditiona l PC-based tasks move to smaller, net-enabled devices. At the same time, there w ill be increased reliance on network availability and dependability. The mobile phone and its uses will be transformed by the higher capabilities of the latest handsets which are now rolling out around the world. Third generation (3G) phone s, which have high-speed internet connections, already outnumber conventional ha ndsets in Japan and are growing quickly in other developed economies. By early 2 007, the Japanese were more likely to be using their phone than their PC to conn ect to the internet. According to Pyramid Research, sales of 3G phones or phones with high-speed net connections will account for 35% of all the world's mobile ph one subscriptions by 2011, from about 11% in 2006. The growth in revenues from d ata downloads (video, music included) for mobiles, according to Pyramid, will be more than three times that of mobile voice revenue over the forecast period, an d is expected to hit US$224bn in 2011. This growth will be driven by more than t he purchase of the latest music video. According to Celent, a US-based consultin g firm, 35% of online banking households will be using mobile banking in 2010, u p from 1% now. Forecasts for mobile TV are varied, but telecom service providers are taking the plunge nonetheless. In the first quarter of 2007, Sprint Nextel, the third largest US mobile service provider, signed a deal with ABC to offer f ull episodes of major prime-time shows streamed directly to subscribers mobile p hones. Customers opting for a US$20/month data plan will be able to watch the fo ur most recent episodes of their favourite shows for free. Deals like these unde rline the rapidly changing environment for telecom service operators. Fixed-line telecoms revenue, according to Pyramid, will remain flat over the next five yea rs, with income from broadband and other internet services making up for the rap idly declining sales of fixed line voice service. This will drop from US$339bn t his year to US$273bn in 2011 as more customers move to mobile phone use only eve n inside their house or internet telephony. - 144 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India By contrast, global mobile phone service revenues, according to Pyramid, will ju mp from US$734bn to US$875bn in the same period, with mobile phone revenues outs tripping fixed-line voice revenues by more than 320% in 2011. In addition to the sheer convenience of the mobile phone for customers in wealthy nations, the han dset has taken on a surprisingly strong role in the developing world. That is be cause the fixed-line infrastructure in many poorer countries remains woefully un developed due to inefficiency, under-investment, high levels of government regul ation or all three. Given the relative ease of setting up a mobile phone network , developing countries will continue to show the fastest growth rates of mobile phone subscriptions globally. Africa, for example, recorded a 46% increase in mo bile customers in 2006, according to Wireless, a telecoms consultancy, and growt h is expected to remain in double digits for the next two years. The Economist I ntelligence Unit forecasts that India will see the number of mobile subscription s rise by an annual average of 27.5% over the next five years to reach 390m by 2 011. Even so, our forecasts show that India's penetration will still be just 33% b y the end of the forecast period, well below that of other major emerging market s such as China (46%) Brazil (69%) and Russia (111%). The research shows clear d igital divide between rich and poor will remain for the next five years at least . Even with the strong growth rates forecast, the penetration of mobile phones i n the Middle East and Africa will reach only 54% by the end of the forecast peri od, and 39% for Asia, excluding Japan. However, the main risks to this forecast are on the upside. The number of subscribers could rise faster as economic growt h accelerates, competition continues to drive down prices and new service packag es are offered. In South Africa, this scenario is already playing out three play ers MTN, Vodacom and Cell C battled so hard for customers that mobile penetratio n hit 75% in 2006. The leading economies of the developed world Japan, Europe an d North America will account for the lion's share of IT spending globally over the next five years, but there will be some reduction in their domination of the se ctor. According to the EIU forecasts, these two regions and Japan will account f or 83% of IT spending in 2007 but this will slip to 79% in 2011. The buoyant eco nomies of India and China will be the major reason for this erosion. Asia, exclu ding Japan, will handsomely outpace the developed world in IT spending over the next five years. We forecast that growth in purchases of IT equipment, software and services in Asia, excluding Japan, will run at about 8-9%, well above the ra te of worldwide growth for the forecast period. China and India alone will accou nt for more than 55% of the IT spending in the region. - 145 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-14 Findings, Conclusions, and Recommendations Access to modern communications is a basic requirement for economic growth and s ocial harmony. The reason that so many people remain unconnected to any kind of communications network is simple. The cost and effort required to deploy traditi onal copper or fibre cable networks to remote rural areas would be astronomical and would take many decades. The lack of existing infrastructure, particularly e lectrical power, makes such a task almost impossible. Wireless is extremely cost effective. With the highly competitive nature of the global wireless market, pa rticularly in GSM, infrastructure costs are very low. Despite the ubiquity of GSM and other cellular technologies, there remain many m illions of people who do not have access to communications. Wireless offers a so lution to this problem, and over the next few years access to communications wil l become the norm rather than the exception. Those communications will initially be basic voice but, driven by demand from customers, operators will rapidly evo lve their service offerings to deliver a true, personalised, communications expe rience to customers worldwide. Operators need to evaluate their technical options as the best solution will nea rly always be a mix of different technologies which together deliver flexible so lutions which meet user's needs. Unified OSS can deploy faster and with lower risk than Best of Breed OSS solutions , avoiding integration and data synchronization costs. It helps operators in eme rging markets achieve RoI on their infrastructure investments sooner and, throug h simplicity and flexibility, allows operators to engage their subscribers with innovative products over evolving networks. Its single data-model exploits relat ionships between network, service, customer, SLA and field-engineer in managing the customer experience. Unified OSS is proven to help operators in emerging mar kets enjoy business benefits of sophisticated OSS solutions. The most innovative way a country or company can finance telecommunication is to find the right combination of financing ways and strategies, to have the knowle dge of which ways to choose from is a key in finding the optimal combination for a country or company. The main advantage by using a combination of strategies a nd financing ways, instead of onesingle way, is that the risks will be reduced, which is an innovative way of financing telecommunication. This will attract mor e investors, because they will get better security on their investments, this is very important. A crucial factor for the country is to lower all possible risks , like political risk, currency risk and inflation which will reduce the risks f or the investors even more. - 146 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India It is also important that the developing countries try to finance locally, which will, for example reduce the currency risk, and also involve the private sector . By involving the private sector together with the public sector, the risks red uce and make the telecommunication projects safer to invest in. Research shows t hat increased FDI leads to increased economic growth. FDI does not only contribu te to capital accumulation, but it also seems to act as a vehicle for technology transfers and hence to foster growth by increasing total factor productivity. Traditional ways to finance telecommunication might not be the most efficient wa y to reduce poverty because of the risk that traditional ways stand for. Instead , by using innovative ways the risks will be reduced which leads to poverty redu ction. In India, public-private partnership has been proved boon for the telecom industry, and government should focus on this with creating the conducing envir onment of investment. The companies should focus on the future technology like N GN, WiMax, GSM, CDMA etc. rather than wire line, providing voice services, enhan cing value added services, concentrating to volume growth despite lowering ARPU, expanding rapidly and keeping the project costs low with increased operating ef ficiency using unified OSS. - 147 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-15 15.1 Internet References BSNL Corporate site: http://bsnl.co.in National Portal of India: http://india.go v.in The Parliament of India: http://www.parliamentofindia.nic.in Ministry of Co mmunications and Information Technology: http://www.moc.gov.in Department of Tel ecommunication: http://www.dot.gov.in Private Investment Promotion in Indian Tel ecom: http://www.dot.gov.in/osp/osp.htm Telecom Regulatory Authority of India: h ttp://www.trai.gov.in Telecom Engineering Center: http://www.tec.gov.in Wireless Planning & Coordination Wing : http://www.wpc.dot.gov.in Telecommunications Con sultants of India Limited : http://www.tcil-india.com Directory of Indian Minist ries and Departments : http://www.nic.in Ministry of Information Technology : ht tp://www.mit.gov.in Ministry of Finance : http://www.finmin.nic.in Secretariat o f Industrial Assistance : http://www.indmin.nic.in Department of Commerce : http ://www.commin.nic.in Ministry of External Affairs : http://www.meadev.nic.in Res erve Bank of India : http://www.rbi.org.in Securities and Exchange Board of Indi a : http://www.sebi.gov.in Confederation of Indian Industry : http://www.ciionli ne.org Associated Chambers of Commerce : http://www.assocham.org Federation of I ndian Chambers of Commerce and Industry : http://www.bisnetindia.com Asia-Pacifi c Telecommunity (APT) : http://www.aptsec.org Ameritrade Education Centre: http: //www.ameritrade.com Asia-Pacific Economic Cooperation: http://www1.apecsec.org. sg Asia Trade Hub: http://www.asiatradehub.com Bashir, Abdel-Hameed M. (1999), " Foreign Direct Investment and Economic Growth In Some MENA Countries": http://ww w.sba.luc.edu/orgs/meea/volume1/bashir.html Bond, Patrik (1997), Privatisation, p articipation and protest in the restructuring of municipal services: http://www.t hewaterpage.com/ppp_debate1.htm Bond, Patrik (1998), Development aspects of munic ipal infrastructure delivery: http://www.local.gov.za/DCD/policydocs/whitepaper/c l2pat.htm Burr, Chandler (2000), "Grameen Village Phone, Its Current Status and Future Prospects": http://www.ilo.org/public/english/employment/ent/papers/grame en.htm Economist: http://www.economist.com Ericsson: http://www.ericsson.com Eur opean Commission: http://europa.eu.int. Eurotunnel: http://www.eurotunnel.com 148 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India International Association of Financial Engineers: http://www.iafe.org Internatio nal Finance Corporation: http://www.ifc.org International Labour Organisation: h ttp://www.ilo.org International Telecommunication Union: http://www.itu.org Inve storwords: http://www.investorwords.com Kuritzkes, Andy: http://fic.wharton.upen n.edu/fic/0402.pdf Methods and Data - Quantlets: http://www.quantlet.com LOCREGI S: http://www.locregis.net Millenium Development Goals, http://www.developmentgo als.org Ministry of Communication - Science and Technology: http://www.mcst.gov. mv Ministry of Finance, Govt. of India: http://indiabudget.nic.in/es2001-02/chap t2002/chap94.pdf Montgomery Research: http://www.utilitiesproject.com OECD: http ://www.oecd.org OECD(2002),"Measuring the Information economy": http://www.oecd. org/dataoecd/16/14/1835738.pdf Pacific Telecommunications Council: http://web.pt c.org Telecomweb: http://www.telecomweb.com The Handbook of World Stocks, Deriva tive & Commodity Exchanges: http://www.exchange-handbook.co.uk. The World Bank I nstitute: http://www.worldbank.org/wbi The World Bank Group: http://www.worldban k.org UNDP (2001), "Creating a Development Dynamic. Final Report of the Digital Opportunity Initiative": http://www.opt-init.org/framework/pages/es.html UN, htt p://www.un.org World Bank: http://www.worldbank.org World Bank (2000a), "Interne t Economic Toolkit for African Policy Makers": http://www.infodev.org/projects/i nternet/010toolkit/afpt1.pdf - 149 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 15.2 Articles TRAI (March 20, 2006), Recommendations on Issues relating to Broadcasting and Di stribution of TV channels. Economic Survey, Annual Reports of the Department of Telecommunications, Ministry of Communications and Technology and the Telecom Re gulatory Authority of India (TRAI)various issues. Business Standard: August 22, 2 007 Panagariya, Arvind (2004). "India in the 1980s and 1990s: A Triumph of Refor ms". "That old Gandhi magic", The Economist, November 27, 1997. Ahluwalia, MS. 2 001, "State level performance under economic reforms in India" Working Paper No. 96, Center for Research on Economic Development and Policy Reform, Stanford Uni versity Department of Telecommunications, Annual Report 2002-2003, Ministry of C ommunication and Information Technology, New Delhi Department of Telecommunicati ons "Indian Telecommunication Statistics: Policy Framework, Status and Trends", Economic Research Unit (Statistics Wing), Ministry of Communications, New Delhi. Bell, Clive & Rich, Robert (1994), "Rural poverty and agricultural performance i n post-independence India", Oxford Bulletin of Economics and Statistics. Berthel emy, Jean-Claude & Varoudakis, Aristomene (1996), "Economic Growth, Convergence Clubs and the Role of Financial Development", Oxford Economic Papers. Bosworth, Barry P. & Collins, Susan M. (1999), "Capital Flows to DevelopingEconomies: Impl ications for Saving and Investment", Brookings Institution. Carkovic, Maria & Le vine, Ross (2002), "Does Foreign Direct Investment Accelerate Economic Growth?", University of Minnesota. Gerald, Joe (1998), Defining Financial Engineering, Fina ncial Engineering News. Ernst, M. & Ngoc-Nga Pham, N. (1994), Financing infrastr ucture in developing economies: Benefits", East Asian Executive Reports. - 150 B y- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Isaksson, Anders & Levin, Jrgen (1999), "Financial Development, Economic Growth a nd Poverty Eradication", Swedish International Development Cooperation Agency (S IDA). Jacobsen, Karen F. (2003), "Telecommunications Development and Economic Gr owth in Developing Countries", Chr. Michelsen Institute. Levine, Ross (1997), "F inancial Development and Economic Growth: Views and Agenda", The Journal of Fina nce. Pedrelli, Maurizio et al (2001), "Developing countries and the ICT revolution", European Parliament - Directorate General for Research. Sridhar, Kala S. & Sridh ar, Varadharajan (2004), "Telecommunications Infrastructure and Economic Growth: Evidence from Developing Countries", National Institute of Public Finance and P olicy: India. - 151 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 15.4 Literature Ferreira, David & Khatami, Kamran (1996). Financing Private Infrastructure in De veloping Countries, Washington DC: World Bank. Kayani, Rogati & Dymond, Andrew ( 1997), Options for Rural Telecommunications Development, Washington DC: World Ba nk. Merna, Tony & Njiru, Cyrus (2002), Financing Infrastructure Projects, Bodmin : Thomas Telford Limited. Neftci, Salih N (2004), Principles of Financial Engine ering, London: Elsevier Inc. Qiang, Christine Z.-W. (2003), Contribution of Information and Communication Tec hnologies to Growth, Herndon: World Bank. United Nations Development Programme ( 2000), Human Development Report, New York: Oxford University Press. Dossani, R. (Ed.) 2002, Telecommunications reform in India. Quorom Books. - 152 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-16 Explanation Of Words In this chapter we will try and explain words that we have used during this proj ect. 3G 3G is the third generation of telecommunication hardware standards and general t echnology for mobile networking, superseding 2.5G. It is based on the Internatio nal Telecommunication Union (ITU) family of standards under the IMT-2000. ADC (Access Deficit Charges) Access Deficit Charge (ADC), is the amount payable by the service provider at th e callers end to the service provider at the receiving end for accessing servic es rendered by the latter in domestic long distance telephony. This would be the means to subsidize the below cost tariffs, i.e. rental/local call charges. ADSL (Asymmetric Digital Subscriber Lines) Is a form of DSL, a data communications technology that enables faster data tran smission over copper telephone lines than a conventional voiceband modem can pro vide. The distinguishing characteristic of ADSL over other forms of DSL is that the volume of data flow is greater in one direction than the other, i.e. it is a symmetric. AGR (Adjusted Gross Revenue) The amount of annual income that a person or company has after various adjustmen ts for income or corporation tax purposes. ARPU (Average Revenue Per User) Average revenue per user (sometimes average revenue per unit) usually abbreviate d to ARPU is a measure used primarily by consumer communications and networking companies, it is the total revenue divided by the number of subscribers. Basic Telephone Service Mean the collection, carriage, transmission and delivery of voice or non-voice m essages over the Licensee's Public Switched Telephone Network (PSTN) and includes provision of all types of services except those which require separate licence. - 153 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Bharat Nirman Bharat Nirman will be a time-bound business plan for action in rural infrastruct ure for the next four years. Under Bharat Nirman, action is proposed in the area s of irrigation, road, rural housing, rural water supply, rural electrification and rural telecommunication connectivity. BTS (Base Transceiver System) A base transceiver station (BTS) is a piece of equipment that facilitates wirele ss communication between user equipment (UE) and a network. UEs are devices like mobile phones (handsets), WLL phones, computers with wireless internet connecti vity, WiFi and WiMAX gadgets etc. The network can be that of any of the wireless communication technologies like GSM, CDMA, WLL, WAN, WiFi, WiMAX etc. BTS is al so referred to as the radio base station (RBS), node B (in 3G Networks) or, simp ly, the base station (BS). For discussion of the LTE standard the abbreviation e NB for enhanced node B is widely used. BWA (Broadband Wireless Access) Broadband Wireless Access (BWA) systems utilize base stations to provide broadba nd voice, data, and video to businesses or homes. It offers an alternative to th e wired "last-mile" access links. Broadband Wireless Access (BWA) technologies p rovide broadband data access bay wireless means to consumer and business markets . The most common example of BWA is wireless LAN, but efforts are intensively co ntinuing to deliver ubiquitous broadband network access by deploying adequate ra dio technologies like Metropolitan Area Networks, 3G and wireless LAN which can even be combined in one single device to ensure seamless operation. CAGR Compounded Annual Growth Rate: is the average annual growth rate calculated over a period (either forecast or historical) CDMA (Code division multiple access) Code division multiple access (CDMA) is a channel access method utilized by vari ous radio communication technologies. It should not be confused with the mobile phone standards called cdmaOne and CDMA2000 (which are often referred to as simp ly "CDMA"), which use CDMA as an underlying channel access method. - 154 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India CEWiT (Centre of Excellence in Wireless Technology) Centre of Excellence in Wireless Technology is public-private initiative to deve lop indigenous worldclass Next Generation wireless technology in India. It is a research organisation established by the Indian government's Dept. of Information Technology in partnership with the Indian telecom industry. The Telecommunicatio n Network research group at IIT Madras is playing a key role in incubating CEWiT . CII The Confederation of Indian Industry: Founded in 1895, CII is an Indian business association, with a direct membership of over 5,300 companies from the private as well as public sectors, including SMEs and MNCs and indirect membership of ov er 80,000 companies from around 300 national and regional sectoral associations. CMIE The Centre for Monitoring Indian Economy: is an independent economic organizatio n which specializes in monitoring and researching the Indian economy CMTS (Cellular Mobile Telephone Service) Means Telecommunication Service provided by means of a telecommunication system for the conveyance of messages through the agency of wireless telegraphy where e very message that is conveyed thereby has been, or is to be, conveyed by means o f a telecommunication system which is designed or adapted to be capable of being used while in motion. The Cellular Mobile Telephone Service refers to transmiss ion of voice or non-voice messages over licensee's network in real time only. This Service does not cover broadcasting of any messages voice or non-voice; however , Cell Broadcast is permitted only to the subscribers of the service. CPP (Calling Party Pay) Calling Party Pays (CPP) is the arrangement in which the mobile subscriber does not pay for incoming calls. Instead, the calling party pays for those calls. Creative financing Is where the seller provides the financing for the purchase of a property. It is the use of one of several methods that enable a seller to dispose the good quic kly without requiring the buyer to qualify for and obtain financing at a lending institution. A part of creative financing is microfinance. - 155 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India CUG (Closed User Group) Closed User Groups are groups of mobile telephone subscribers who can only make calls and receive calls from members within the group. Any other calls would be rejected. Dark Fiber In fiber optic communications, dark fiber or unlit fiber (or fibre) refers to un used fibers, available for use. DEL (Direct Exchange Line) Means a telephone connection between the subscriber's terminal equipment and the t erminal exchange.E1 level means a primary PCM bandwidth of 2.048 Mb/s. DOT (Department of Telecom) The Department of Telecommunications is part of the Ministry of Communications a nd Information Technology in the executive branch of the Government of India. DTH (Direct to Home) DTH is defined as the reception of satellite programmes with a personal dish in an individual home. DTS (Department of Telecommunication Services) The service-providing sector of DoT was split up and called Department of Teleco m Services (DTS). DTS was later corporatized and renamed Bharat Sanchar Nigam Li mited (BSNL). Emerging markets It is a financial market of a developing country, usually a small market with sh ort operating history. Factory outlet Also called an outlet shop, is a shop supposedly selling goods direct from the f actory at a discount. - 156 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India FBG (Financial Bank Guarantee) An indemnity letter in which the bank commits itself to pay a certain sum if a t hird party fails to perform or if any other form of default occurs. One use is w hen a bank wants a carrier to release a shipment which it has financed but the o riginal bills of lading are not yet available for surrender to the carrier. FDI (Foreign Direct Investment ) in its classic form is defined as a company from one country making a physical i nvestment into building a factory in another country. It is the establishment of an enterprise by a foreigner. FICCI Federation of Indian Chambers of Commerce and Industry: Set up in 1927, it is a business association with over 1,500 corporate members Financial engineering Is a process by which quantitative methods are used to design financial transact ions and the financial structure of an organization in order to maximize the org anization's effectiveness. FIPB (FOREIGN INVESTMENT PROMOTION BOARD ) Has been set up by the government of India in order to increase the flow of foreign direct i nvestments into the country. By doing this, Foreign Investment Promotion Board ( FIPB) has been able to give a major boost to the Indian economy. GDP (Gross Domestic Product) Is the total market value of all goods and services produced in a country in a g iven year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. GNI (Gross national income) Gross national income (GNI) comprises the total value produced within a country (i.e. its gross domestic product), together with its income received from other countries (notably interest and dividends), less similar payments made to other countries. - 157 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India GNP (Gross national product) Is the value of all final goods and services produced within a nation in a given year, plus income earned by its citizens abroad, minus income earned by foreign ers from domestic production. GSM (Groupe Spcial Mobile) GSM (Global System for Mobile communications: originally from Groupe Spcial Mobil e) is the most popular standard for mobile phones in the world. GSS (Gramin Sanchar Sewak Scheme ) The Grameen Sanchar Sewak (GSS) scheme, an ambitious pilot project to introduce rural mobile services kick started by Bharat Sanchar Nigam Lmited (BSNL) and the Department of Posts in 2002, is ready to be regularized and go national, after a resounding triumph in the Indian state West Bengal. HDI (Human Development Index) Is a summary composite index that measures a countrys average achievements in t hree basic aspects of human development: longevity, knowledge, and a decent stan dard of living. Longevity is measured by life expectancy at birth; knowledge is measured by a combination of the adult literacy rate and the combined primary, s econdary, and tertiary gross enrolment ratio; and standard of living by GDP per capita (PPP USD). HPI-1 (Human Poverty Index) Poverty has traditionally been measured as a lack of income, but this is far too narrow a definition. Human poverty is a concept that captures the many dimensio ns of poverty that exists in both poor and rich countries; it is the denial of c hoices and opportunities for living a life one has reason to value. The HPI-1, h uman poverty index for developing countries, measures human deprivations in the same three aspects of human development as the HDI (longevity, knowledge and a d ecent standard of living). ICT Information and Communications Technology - or technologies (ICT) is an umbrella term that includes all technologies for the manipulation and communication of i nformation. ILD (International Long Distance) Access to the outside of the country by a service provider. - 158 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Infrastructure Provider (S) Means a person or persons providing inactive elements of the telecom network inc luding dark fibers, right of way, duct space, towers, etc. as well as those who provide end to end bandwidth to other service providers IN Services The Intelligent Network, typically stated as its acronym IN, is a network archit ecture intended both for fixed as well as mobile telecom networks. It allows ope rators to differentiate themselves by providing value-added services in addition to the standard telecom services such as PSTN, ISDN and GSM services on mobile phones. In IN, the intelligence is provided by network nodes owned by telecom op erators, as opposed to solutions based on intelligence in the telephone equipmen t, or in Internet servers provided by any part. IN is based on the Signaling Sys tem #7 (SS7) protocol between telephone network switching centers and other netw ork nodes owned by network operators. International Long Distance Telecommunication Service Means telecommunication services originating within India and terminating outsid e India and vice versa. Internet Broadband Broadband Internet access, often shortened to just broadband, is high data rate Internet accesstypically contrasted with dial-up access over a 56k modem. Althoug h various minimum bandwidths have been used in definitions of broadband, ranging up from 64 kbit/s up to 1.0 Mbit/s, the 2006 OECD report is typical by defining broadband as having download data transfer rates equal to or faster than 256 kb it/s, while the United States FCC, as of 2008, defines broadband as anything abo ve 768 kbit/s. The trend is to raise the threshold of the broadband definition a s the marketplace rolls out faster services. Data rates are defined in terms of maximum download because several common consumer broadband technologies such as ADSL are "asymmetric"supporting much slower maximum upload data rate than downloa d. - 159 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India IPTV An IPTV (Internet Protocol Television) service (or technology) is the new conver gence service ( or technology) of the telecommunications and broadcasting throug h QoS controlled Broadband Convergence IP Network including wire and wireless fo r the managed, controlled and secured delivery of a considerable number of multi media contents such as Video, Audio, data and applications processed by platform to a customer via Television, PDA, Cellular, and Mobile TV terminal with STB mo dule or similar device. ISD (International Subscriber Dialing) Means facility for direct connectivity between an end user in India with another end user in another country by means of direct dialing through licensed network s. ISP (Internet Service Providers) An Internet service provider (ISP, also called Internet access provider, or IAP) is a company that offers its customers access to the Internet. The ISP connects to its customers using a data transmission technology appropriate for deliverin g Internet Protocol datagrams, such as dial-up, DSL, cable modem or dedicated hi gh-speed interconnects. ISUP Means Integrated Service Digital Network (ISDN) User Part ITES Given the proximity of BPO to the information technology industry, it is also ca tegorized as an information technology enabled service or ITES. Business process outsourcing (BPO) is a form of outsourcing that involves the contracting of the operations and responsibilities of a specific business functions (or processes) to a third-party service provider. ITU The International Telecommunication Union is the second-oldest international org anization still in existence (the oldest being the Rhine Commission), establishe d to standardize and regulate international radio and telecommunications. It was founded as the International Telegraph Union in Paris on 17 May 1865. Its main tasks include standardization, allocation of the radio spectrum, and organizing interconnection arrangements between different countries to allow international phone calls in which regard it performs for telecommunications a similar functio n to what the UPU performs for postal services. It is one of the specialized age ncies of the United Nations, and has its headquarters in Geneva, Switzerland, ne xt to the main United Nations campus. - 160 By- Neeraj Kumar Singh (Roll No- 520 751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India IUC (Interconnection Usage Charges) It is the charge levied by the telecom company to whom a call is being terminate d to. Local component Is a factor that you can find locally in an area. For example, in a certain city you can find more capital, people that has a higher education, more labor and s o on. It is what you can find as local condition and make it to your advantage. Leased Circuits Means telecommunication facilities leased to subscribers or service providers to provide for technology transparent transmission capacity between network termin ation points which the user can control as part of the leased circuit provision. MARR (Multi Access Radio Relay) Access technology used to provide V.P.T. in rural India. Microfinance Is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance to poor and low-income househo lds and their micro enterprises. MPLS-VPN MPLS VPN is a family of methods for harnessing the power of Multiprotocol Label Switching (MPLS) to create Virtual Private Networks (VPNs). MPLS is well suited to the task as it provides traffic isolation and differentiation without substan tial overhead. National Long Distance National Long Distance Service means picking up, carriage and delivery of switch ed bearer telecommunication service over a long distance network i.e., a network connecting different Short Distance Charging Areas (SDCAs). - 161 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India NGN (Next Generation Networking) Iis a broad term to describe some key architectural evolutions in telecommunicat ion core and access networks that will be deployed over the next 510 years. The g eneral idea behind NGN is that one network transports all information and servic es (voice, data, and all sorts of media such as video) by encapsulating these in to packets, like it is on the Internet. NGNs are commonly built around the Inter net Protocol, and therefore the term "all-IP" is also sometimes used to describe the transformation towards NGN. NII (National Information Infrastructure) The National Information Infrastructure (NII) was the product of the High Perfor mance Computing and Communication Act of 1991. It was a telecommunications polic y buzzword, which was popularized during the Clinton Administration under the le adership of Vice-President Al Gore. It was a proposed, advanced, seamless web of public and private communications networks, interactive services, interoperable hardware and software, computers, databases, and consumer electronics to put va st amounts of information at users fingertips. NII includes more than just the physical facilities (more than the cameras, scanners, keyboards, telephones, fax machines, computers, switches, compact disks, video and audio tape, cable, wire , satellites, optical fiber transmission lines, microwave nets, switches, televi sions, monitors, and printers) used to transmit, store, process, and display voi ce, data, and images; it encompasses a wide range of interactive functions, user -tailored services, and multimedia databases that are interconnected in a techno logy-neutral manner that will favor no one industry over any other. NIXI (National Internet Exchange of India) The National Internet Exchange of India is the neutral meeting point of the ISPs in India. Its main purpose is to facilitate exchange of domestic Internet traff ic between the peering ISP members. This enables more efficient use of internati onal bandwidth, saving foreign exchange. It also improves the Quality of Service s for the customers of member ISPs, by avoiding multiple international hops and thus reducing latency. NLDO (National Long Distance Operator) means the telecom operator providing the required digital capacity to carry long distance telecommunication service within the scope of LICENSE for National Lon g Distance Service, which may include various types of tele services defined by ITU, such as voice, data, fax, text, video, and multi media etc. - 162 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India NRI- Non Resident Indian A non-resident Indian (NRI) is an Indian citizen who has migrated to another cou ntry, a person of Indian origin who is born outside India, or a person of Indian origin who resides outside India. Other terms with the same meaning are oversea s Indian and expatriate Indian. In common usage, this often includes Indian born individuals (and also people of other nations with Indian blood) who have taken the citizenship of other countries NTP 1999 The New Telecom Policy, 1999 (NTP-99) was approved on 26th March, 1999, to becom e effective from 1st April, 1999. NTP-99 laid down a clear roadmap for future re forms, contemplating the opening up of all the segments of the telecom sector fo r private sector participation. OECD The Organisation for Economic Co-operation and Development (OECD) (in French: Or ganisation de coopration et de dveloppement conomiques, OCDE) is an international o rganisation of 30 countries that accept the principles of representative democra cy and free-market economy. Most OECD members are high-income economies with a h igh HDI and are regarded as developed countries. It originated in 1948 as the Or ganisation for European Economic Co-operation (OEEC), led by Robert Marjolin of France, to help administer the Marshall Plan for the reconstruction of Europe af ter World War II. Later, its membership was extended to non-European states. In 1961, it was reformed into the Organisation for Economic Co-operation and Develo pment by the Convention on the Organisation for Economic Co-operation and Develo pment. OFC (Optical fiber cable) An optical fiber cable is a cable containing one or more optical fibers. The opt ical fiber elements are typically individually coated with plastic layers and co ntained in a protective tube suitable for the environment where the cable will b e deployed. Open Network Architecture (ONA) Open network architecture (ONA) is the overall design of a communication carrier s basic network facilities and services to permit all users of the basic networ k to interconnect to specific basic network functions and interfaces on an unbun dled, equal-access basis. The ONA concept consists of three integral components: >Basic serving arrangements (BSAs) >Basic service elements (BSEs) >Complementar y network services - 163 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India PCO A Public call office (PCO) is a telephone facility located in a public place in India. Point of Presence (PoP) A point-of-presence (POP) is an artificial demarcation point or interface point between communications entities. A point of presence was a location where a long -distance carrier could terminate services and provide connections into a local telephone network. An Internet point of presence is an access point to the Inter net. It is a physical location that houses servers, routers, ATM switches and di gital/analog call aggregators. It may be either part of the facilities of a tele communications provider that the Internet service provider (ISP) rents or a loca tion separate from the telecommunications provider. ISPs typically have multiple POPs, sometimes numbering in the thousands. POPs are also located at Internet e xchange points and colocation centres. Point of Presence (POP) (as applicable to BSO) Means setting up of switching centre and transmission centre of appropriate capa city by Basic Telephone Service Provider at the SDCA level to provide, on demand , service of prescribed quality and grade of service in a non-discriminatory man ner. Point of Presence (POP) (as applicable to NLDO) Means setting up of switching center and transmission center of appropriate capa cities by National Long Distance Service Provider at the LDCC level to provide o n demand inter-circle long distance services of prescribed quality and grade of service in a non-discriminatory manner. Point of Presence (POP) (as applicable to ILDO) Means setting up of switching center and transmission center of appropriate capa city by the Licensee to provide on demand, service of prescribed quality and gra de of service in a non-discriminatory manner. Point of Interconnection (POI) Means a mutually agreed upon point of demarcation (based on TRAI determinations/ regulations) where the exchange of traffic between the two Parties takes place. Pre-Paid Phone Card Is a card you purchase in advance (for a set price) and use to make short or lon g distance phone calls. These cards are usually sold in USD amounts or by number of minutes. - 164 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Private Sector Company Means a company in which 51% or more of the subscribed and paid up equity is own ed and controlled by a private entity. Pro-poor growth Compares changes in the incomes of poor people with respect to changes in the in comes of the nonpoor. Growth is "pro-poor" if the incomes of poor people grow fa ster than those of the population as a whole, i.e. inequality declines. PPP Public-private partnership (PPP) describes a government service or private busin ess venture which is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to a s PPP or P3. PSTN Means the Public Switched Telephone Network. Public Sector Company (PSU) Public Sector Undertaking a company (majority) owned, managed and run by the Gov ernment of India. QOS Means Quality of Service. R&D The phrase research and development (also R and D or, more often, R&D), accordin g to the Organization for Economic Co-operation and Development, refers to "crea tive work undertaken on a systematic basis in order to increase the stock of kno wledge, including knowledge of man, culture and society, and the use of this sto ck of knowledge to devise new applications. SACFA (Standing Advisory Committee on Radio Frequency Allocation) SACFA makes the recommendations on major frequency allocation issues, formulatio n of the frequency allocation plan, making recommendations on the various issues related to International Telecom Union (ITU), to sort out problems referred to the committee by various wireless users, citing clearance of all wireless instal lations in the country etc. - 165 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India SEZ A Special Economic Zone (SEZ) is a geographical region that has economic laws th at are more liberal than a countrys typical economic laws. Steady State Growth Is traditional economic theory that growth rates of different countries would co nverge towards a natural rate. TDSAT (Telecommunications Dispute Settlement and Appellate Tribunal ) By the Amendment Act an Appellate Tribunal known as the Telecom Disputes Settleme nt & Appellate Tribunal has been set up under Section 14 of the Telecom Regulator y Authority of India Act, 1997 by TRAI (Amendment) Act, 2000 (hereinafter called the Act) to adjudicate disputes and dispose of appeals with a view to protect the interests of service providers and consumers of the telecom sector and to promo te and ensure orderly growth of the telecom sector. Tele-density Is main lines per 100 inhabitants. Telecommunication Tariff Order (TTO) 1999 The Telecommunication Tariff Order, 1999 (TTO '99) envisaged rebalancing of tariff s wherein an increase in the rentals was coupled with a reduction in call charge s for STD and ISD. The increase in rentals and the reduction in STD/ ISD call ch arges required for a rebalancing of tariffs were found to be too sharp to be imp lemented in one phase. Therefore, the implementation of tariff re-balancing was specified in three phases. The first phase was implemented on 1st April, 1999. T he second phase was scheduled to be implemented with effect from 1st April, 2000 . TRAI (Telecom Regulatory Authority of India) The Telecommunications Regulatory Authority of India (Hindi: endent regulator established by the Government of India to regulate the telecomm unications business in India. - 166 By- Neeraj Kumar Singh (Roll No- 520751161) )

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India UAS (Unified Access Services ) TRAI issued its Consultation Paper on Unified Access Services Licensing (UASL) for basic and cellular services on 16 July 2003. On 27 October 2003, it produced a blueprint for a UASL regime that called for a single licence for basic service op erators BSO and cellular carriers. On 11 November 2003, the government endorsed t his plan. As a result, both BSO and cellular carriers gained the freedom to offe r basic and/or cellular mobile services using any technology. UN The United Nations (UN) is an international organization whose stated aims are t o facilitate cooperation in international law, international security, economic development, social progress, human rights, and achieving world peace. The UN wa s founded in 1945 after World War II to replace the League of Nations, to stop w ars between countries, and to provide a platform for dialogue. There are current ly 192 member states, including nearly every recognized independent state in the world. From its headquarters on international territory in New York City, the U N and its specialized agencies decide on substantive and administrative issues i n regular meetings held throughout the year. UNDP The United Nations Development Programme (UNDP) is the United Nations global de velopment network. The UNDP is an executive board within the United Nations Gene ral Assembly. The UNDP Administrator is the third highest ranking member of the United Nations after the United Nations Secretary-General and Deputy Secretary-G eneral. Headquartered in New York City, the UNDP is funded entirely by voluntary contributions from member nations. The organization has country offices in 166 countries, where it works with local governments to meet development challenges and develop local capacity. Additionally, the UNDP works internationally to help countries achieve the Millennium Development Goals (MDGs). USAID The United States Agency for International Development (USAID) is the United Sta tes federal government organization responsible for most non-military foreign ai d. An independent federal agency, it receives overall foreign policy guidance fr om the United States Secretary of State and seeks to "extend a helping hand to t hose people overseas struggling to make a better life, recover from a disaster o r striving to live in a free and democratic country. USAID advances U.S. foreign policy objectives by supporting economic growth, agriculture and trade; health; democracy, conflict prevention, and humanitarian assistance. It provides assist ance in SubSaharan Africa; Asia and the Near East, Latin America and the Caribbe an, Europe, and Eurasia. USAID - 167 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India is organized around three main pillars: Economic Growth, Agriculture, and Trade; Global Health; Democracy, Conflict, and Humanitarian Assistance. USL (Universal Service Levy ) Universal Service Levy (USL), is a percentage of the revenue earned by the opera tors under various licenses. USOF (Universal Service Obligation Fund ) The Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Univer sal Service Obligation Fund (USOF) was passed in December 2003. The Fund is to b e utilized exclusively for meeting the Universal Service Obligation by providing access to telegraph services to people in the rural and remote areas at afforda ble and reasonable prices. The USO Fund was established with the fundamental obj ective of providing access to `basic' telegraph services. Subsequently, an Act has b een passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend t he Indian Telegraph Act, 1885 to enable provision of all types of telegraph serv ices. VAS(Value-Added Services) Means such services as may be available over a Telecommunications System in addi tion to Voice Telephony or Data Services, and specifically those services listed as "Value-Added Services" in the Regulations or Orders. VoIP Voice over Internet Protocol (VoIP) is a general term for a family of transmissi on technologies for delivery of voice communications over IP networks such as th e Internet or other packet-switched networks. Other terms frequently encountered and synonymous with VoIP are IP telephony, Internet telephony, voice over broad band (VoBB), broadband telephony, and broadband phone. VSAT (A Very Small Aperture Terminal) Is a two-way satellite ground station with a dish antenna that is smaller than 3 meters. Most VSAT antennas range from 75 cm to 1.2 m. Data rates typically rang e from narrowband[vague] up to 4 Mbit/s. VSATs access satellites in geosynchrono us orbit to relay data from small remote earth stations (terminals) to other ter minals (in mesh configurations) or master earth station "hubs" (in star configur ations). g VSATs are most commonly used to transmit narrowband data (point of sa le transactions such as credit card, polling or RFID data; or SCADA), or broadba nd data (for the provision of Satellite Internet access to remote locations, VoI P or video). VSATs are also used for transportable, on-the-move (utilising phase d array antennas) or mobile maritime communications. - 168 By- Neeraj Kumar Sing h (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India VPT(Village Public Telephone) Telephone connections provided in rural villages. Wire-line In the United States, the pair of wires from the central switch office to a subs cribers home is called a subscriber loop. It is typically powered by -48V direc t current (DC) and backed up by a large bank of batteries (connected in series) in the central office, resulting in continuation of service during most commerci al power outages. The services provided on this pair of wire are called wire-lin e services. WiMax WiMAX, meaning `Worldwide Interoperability for Microwave Access', is a telecommunica tions technology that provides wireless transmission of data using a variety of transmission modes, from point-to-multipoint links to portable and fully mobile internet access. The technology provides up to 3 Mbit/s broadband speeds without the need for cables. The technology is based on the IEEE 802.16 standard (also called Broadband Wireless Access). The name "WiMAX" was created by the WiMAX For um, which was formed in June 2001 to promote conformity and interoperability of the standard. The forum describes WiMAX as "a standards-based technology enablin g the delivery of last mile wireless broadband access as an alternative to cable and DSL". WLL(Wireless in Local Loop) WLL-M is a communication system that connects customers to the landline network using radio frequency signals instead of conventional copper wires, for the full or part connection between the subscriber and the exchange WPC ( Wireless Planning & Co-ordination (WPC) Wing) Wing of the Ministry of Communications, created in 1952, is the National Radio R egulatory Authority responsible for Frequency Spectrum Management, including lic ensing and caters for the needs of all wireless users (Government and Private) i n the country. WPC is divided into major sections like Licensing and Regulation (LR), New Technology Group (NTG) and Standing Advisory Committee on Radio Freque ncy Allocation (SACFA). - 169 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Unit-17 Appendix 17.1 Basic Information of Indian economy and social structure - 170 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.2 Financial Statement of BSNL - 171 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 172 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 173 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 174 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 175 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 176 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.3 Financial Performance of Airtel - 177 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.4 World telecoms and technology industry 2002 2003 980.7 2004 2005 2006 2007 2008 2009 2010 2011 Telephone main lines (m) per 100 people Mobile subscribers (m) per 100 people In ternet users (m) per 100 people Broadband subscriber lines per 100 people Person al computers (per 1000 people) 931.4 1,028.6 1,073.0 1,114.1 1,150.1 1,174.5 1,186.7 1,200.4 1,217.0 19.5 20.4 21.1 21.8 22.5 23.0 23.2 23.3 23.3 23.5 1,071.2 1,289.0 1,587.6 1,954.1 2,247.3 2,482.6 2,668.0 2,824.8 2,970.1 3,113.9 22.5 26.8 32.6 39.8 45.3 49.6 52.8 55.4 57.8 60.0 543.1

648.5 762.8 841.1 926.2 1,030.6 1,143.1 1,258.2 1,376.8 1,503.0 11.4 13.5 15.7 17.1 18.7 20.6 22.6 24.7 26.8 29.0 68.5 107.8 159.9 217.1 284.3 351.3 415.0 475.3 532.6 585.9 1.4 2.2 3.3 4.4 5.7

7.0 8.2 9.3 10.4 11.3 126.2 144.4 159.5 175.1 198.3 212.1 225.7 239.5 252.9 265.7 (a) 60 countries covered by the Economist Intelligence Unit's industry service. So urce: Economist Intelligence Unit. - 178 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.5 Tele-density Picture In India - 179 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.6 Economic and social indicators of India Demography Unit Population Urban population Birth rate Death rate Infant mortality rate Lif e expectancy Labor force (Million) (% to total) (Per 1,000) (Per 1,000) (Per 1,0 00 live births) (Years) (Million) Value 1,065 28 25 8 68 65.4 427 National Income Unit Gross Domestic Product (GDP) Share in GDP Agriculture Industry Manufacturin g Services Net National Product Per capita NNP Per capita PPP Gross Domestic Sav ings Gross Domestic Capital formation (% to GDP) 26 (%) (%) (%) (%) (US$ Bn) (US $) (US$) (% to GDP) 24 25 17 51 579 530 2,880 28 (US$ Bn) Value 652 - 180 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Agriculture Unit Production Foodgrains Rice Wheat Sugar* Tea Tobacco Oilseed Cotton Fruits V egetables Fertiliser Consumption per hectare of arable land (kg.) 94 (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn tonnes) (Mn ton nes) (Mn tonnes) (Mn tonnes) 206.4 88 73 13 0.8 1 25 17 48 90 Value *Centrifugal sugar expressed in raw value Infrastructure & communications Unit Electricity production Electricity consumption Per capita Rail route Air pa ssengers carried Motor vehicles TV sets Telephone main lines Cellular Mobile sub scribers Personal computers Internet Users Researchers in R & D R & D Expenditur e (Bn kwh) (kwh) (km) (Mn) Value 587 538 63,140 22.3 (per 1,000 people) 10 (per 1,000 people) 83 (per 1,000 people) 41 (per 1,000 peo ple) 55 (per 1,000 people) 7 (per 1,000 people) 16 (per Mn people) (% to GDP) 12 0 0.85 - 181 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India External Sector & Exchange Unit Exports As % of world reserves Exchange rate n) (Rs./ per US$) Value 79 rate exports Exports of commercial services Imports Forex Pertains to September 30, 2005 ($ Bn) (%) ($ Bn ($ Bn) ($ B 0.8 25 107 143 44.00

Inflation, Banking & Capital market Unit Consumer prices Domestic credit by Banking sector Commercial bank Lending r ate Total Insurance density Total Insurance penetration FDI inflows Listed domes tic companies Market capitalisation (%) ($) (% to GDP) ($ Bn) (No.) ($ Bn on 28/ 7/05) 10.5 16 3 5.5 5,644 450 (% to GDP) 31 (Ave. % '04-05) Value 3.8 External debt Unit Total Debt outstanding Debt service ratio ($ Bn) (%) Value 113.6 18.3 - 182 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Social sector indicators Unit Gross enrolment ratio in primary schools Adult literacy Labour cost per wor ker in manufacturing Education expenditure (Public) Physicians Health expenditur e (Public) Health expenditure per capita Conventional contraceptive users Overal l pill users (%) (%) ($ per year) ( % to GDP) (per 1,000 population) (% to GDP) ($) (Mn) (Mn) Value 99 61 1,800 3.7 0.5 1.5 8 16.5 8.2 Poverty Unit Population below poverty line Note: Data generally relate to the latest ava ilable period, 2004-05 Source: Statistical Outline of India 2004-05, Economic Su rvey of India 04-05, CMIE, TSMG. (%) Value 26.1 - 183 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 184 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 185 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 186 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 187 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.7 Sector Distribution of Investment Commitments to Infrastructure Projects - 188 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India 17.8 Auditor General of India Report on Outstanding Billed Amount in Telecom - 189 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 190 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 191 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India - 192 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Declaration I here by declare that the project report entitled Descriptive qualitative approa ch towards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service pro vider of India. submitted in partial fulfillment of the requirements for the degr ee of Masters of business Administration to Sikkim-Manipal University, India, is my original work and not submitted for the award of any other degree, diploma, fellowship, or any other similar title or prizes. Place: Date: (Neeraj Kumar Singh) Reg. No:520751161 - 193 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Examiner's Certification The project report of Mr Neeraj Kumar Singh, titled Descriptive qualitative appro ach towards the financing needs of Indian telecom sector and different innovativ e ways to finance its growth with a case study of B.S.N.L., a telecom service pr ovider of India. is approved and is acceptable in quality and form. Internal Examiner External Examiners (Srikanta Ghosh) M.B.A. (Finance & Marketing) - 194 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India University study centre certificate This is to certify that the project entitled Descriptive qualitative approach tow ards the financing needs of Indian telecom sector and different innovative ways to finance its growth with a case study of B.S.N.L., a telecom service provider of India. submitted in partial fulfillment of the requirements for the degree of `M asters of Business Administration' of Sikkim-Manipal University of Health, Medical and technological sciences by Mr. Neeraj Kumar Singh, has been worked under my supervision and guidance and that no part of this report has been submitted for the award of any other degree, diploma, fellowship or other similar titles or pr izes and that the work has not been published in any journal or Magazine. Reg.No.:520751161 Certified (Srikanta Ghosh) M.B.A.( Finance & Marketing ) - 195 By- Neeraj Kumar Singh (Roll No- 520751161)

Descriptive qualitative approach towards the financing needs of Indian telecom s ector and different innovative ways to finance its growth with a case study of B .S.N.L., a telecom service provider of India Project Examination Marks Statement for MBA IV Semester (Revised) University: Si kkim Manipal University Status: Date of Examination: Roll. Name Internal Evaluat or No. Synopsis Methodology Analysis + Findings 25 marks IE3 Project Report VIVA Total internal evaluator's marks 100 marks IE= IE1+ IE2 + IE3 + IE4 + IE5 Learning Centre Code:0249 External Evaluator Grand Total Marks Total external evaluator's marks 100 marks EE= EE1+ EE2 +EE3 + EE4 + EE5 200 Marks Synopsis Methodology Analysis + Findings 25 marks EE3 Project Report VIVA Neeraj Kumar Singh 05 marks IE1 10 marks IE2 25 marks IE4 35 marks IE5 05 marks EE1 10 marks EE2 25 marks EE4 35 marks EE5 We here by certify that the project examination has been conducted on the date a s indicated above and the information given above has been verified and found co rrect. 1) Internal Examination Signature with Date 2) External Examiner Signatur e with Date Name: Srikanta Ghosh 520751161 Name: Centre In Charge stamp with signature - 196 By- Neeraj Kumar Singh (Roll No- 520 751161)