A PROJECT REPORT

ON

INDIAN TELECOM
INDUSTRY

BY B4 GROUP
 INDEX
SR.NO. CONTENTS PAGE NO.
1 INTRODUCTION 3
2 HISTORY 3
3 FUTURE PROSPECTS 7
4 CHALLENGES 7
5 MARKET STRUCTURE AND MAJOR PLAYERS 9
6 REGULATORY BODY AND LEGAL ASPECTS 14
7 CURRENT ISSUES 21
8 SIGNIFICANT EVENTS 25
9 MICRO ANALYSIS- RELIANCE COMMUNICATION 26
10 RELIANCE- HISTORY 27
11 KEY PERSONNEL 29
12 CORPORATE GOVERNANCE 30
13 MILESTONES 31
14 SWOT ANALYSIS 32
15 4 P’s 34
16 HR CODE OF CONDUCT 37
17 CORPORATE SOCIAL RESPONSIBILITY 41
18 FUTURE PLANS 45
19 RECENT EVENTS 46
20 SUGGESTIONS AND CONCLUSION 47

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INTRODUCTION
Indian Telecom industry is one of the fastest growing telecom markets in the
world. In telecom industry, service providers are the main drivers; whereas
equipment manufacturers are witnessing growth and decline in successive
quarters as sales is dependent on order undertaken by the companies. Airtel,
Reliance, Tata and Sterlite are some of the companies that are expected to spur
the growth in AMJ08, as compared to AMJ07. According to Cygnus estimates,
telecom industry is expected to grow by 25% in AMJ08 as compared to AMJ07,
in terms of sales. EBDITA and PAT are expected to grow by 32% and 34%
respectively in AMJ08 as cost expenses are being control by major companies
like Airtel and Reliance. The major booster is the wireless mobile subscriber
base; crossing over 261m in March 2008. Other services like Internet subscriber
base has also provided significant impetus with its subscriber base
reaching over 11m in March 2008.

HISTORY OF TELECOM IN INDIA

History of Indian Telecommunications started in 1851 when the first operational

land lines were laid by the government near Calcutta (seat of British power).
Telephone services were introduced in India in 1881. In 1883 telephone services
were merged with the postal system. Indian Radio Telegraph Company (IRT)
was formed in 1923. After independence in 1947, all the foreign
telecommunication companies were nationalized to form the Posts, Telephone
and Telegraph (PTT), a monopoly run by the government's Ministry of
Communications. Telecom sector was considered as a strategic service and the
government considered it best to bring under state's control.

The first wind of reforms in telecommunications sector began to flow in 1980s

when the private sector was allowed in telecommunications equipment
manufacturing. In 1985, Department of Telecommunications (DOT) was
established. It was an exclusive provider of domestic and long-distance service
that would be its own regulator (separate from the postal system). In 1986, two
wholly government-owned companies were created: the Videsh Sanchar Nigam
Limited (VSNL) for international telecommunications and Mahanagar Telephone
Nigam Limited (MTNL) for service in metropolitan areas. Mahanagar Telephone
Nigam Limited (MTNL), to serve Delhi and Bombay, and Videsh Sanchar Nigam
Limited (VSNL), to operate international telecom services.

In 1990s, telecommunications sector benefited from the general opening up of

the economy. Also, examples of telecom revolution in many other countries,
which resulted in better quality of service and lower tariffs, led Indian policy
makers to initiate a change process finally resulting in opening up of telecom
services sector for the private sector. National Telecom Policy (NTP) 1994 was
the first attempt to give a comprehensive roadmap for the Indian
telecommunications sector. Under the government’s new policy, India was

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divided into 20 circles roughly corresponding to state boundaries, each of which
would contain two fixed operators (including the incumbent), and two mobile
operators. As ground-breaking as NTP-94 was, its implementation was
unfortunately marred by regulatory uncertainty and over-bidding. A number of
operators were unable to live up to their profligate bids and, confronted with far
less lucrative networks than they had supposed, pulled out of the country. As a
result, competition in India’s telecom sector did not really become a reality until
1999. In 1997, Telecom Regulatory Authority of India (TRAI) was created. TRAI
was formed to act as a regulator to facilitate the growth of the telecom sector.
New National Telecom Policy was adopted in 1999 and cellular services were
also launched in the same year.

. At that time the government’s New Telecommunications Policy (NTP-99)

switched from a fixed fee license to a revenuesharing regime of approximately
15%. This figure has subsequently been lowered (to 10%-12%), and is expected
to be reduced even further over the coming years. Still, India continues to derive
substantial revenue from license fees ($800 million in 2001-2002), leading some
critics to suggest that the government has abrogated its responsibilities as a
regulator to those as a seller. Another, perhaps even more significant, problem
with India’s initial attempts to introduce competition was the lack of regulatory
clarity. Private operators complained that the licensor – the DOT – was also the
incumbent operator. The many stringent conditions attached to licenses were
thus seen by many as the DOT’s attempt to limit competition. It was in response
to such concerns that the 9 government in 1997 set up the Telecom Regulatory
Authority of India (TRAI), the nation’s first independent telecom regulator. Over
the years, TRAI has earned a growing reputation for independence, transparency
and an increasing level of competence. Early on, however, the regulator was
beleaguered on all fronts. It had to contend with political interference, the
incumbent’s many challenges to its authority, and accusations of ineptitude by
private players. Throughout the late 1990s, TRAI’s authority was steadily whittled
away in a number of cases, when the courts repeatedly held that regulatory
power lay with the central government. It was not until 2000, with the passing of
the TRAI Amendment Act, that the regulatory body really came into its own.
Coming just a year after NTP-99, the act marks something of a watershed
moment in the history of India telecom liberalization. It set the stage for several
key events that have enabled the vigorous competition witnessed today.

India has also suffered from its fair share of regulatory hiccups. Many operators
(mobile players in particular) still complain about the difficulties of gaining access
to the incumbent’s (BSNL) network, and the government’s insistence on capping
FDI in the telecom sector to 49% (a move made in the name of national security)
limits capital availability and thus network rollout. In addition, ISPs, who were
allowed into the market under a liberal licensing regime in 1998, continue to
hemorrhage money, and have been pleading with the government for various
forms of relief, including the provision of unmetered phone numbers for Internet
access. Despite initially impressive results, the growth of Internet in the country

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 has recently stalled, with only 8 million users. Broadband penetration, too,
remains tiny.

Telecommunication sector in India can be divided into two segments: Fixed

Service Provider (FSPs), and Cellular Services. Fixed line services consist of
basic services, national or domestic long distance and international long distance
services. The state operators (BSNL and MTNL), account for almost 90 per cent
of revenues from basic services. Private sector services are presently available
in selective urban areas, and collectively account for less than 5 per cent of
subscriptions. However, private services focus on the business/corporate sector,
and offer reliable, high- end services, such as leased lines, ISDN, closed user
group and videoconferencing.

Cellular services can be further divided into two categories: Global System for
Mobile Communications (GSM) and Code Division Multiple Access (CDMA). The
GSM sector is dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the
CDMA sector is dominated by Reliance and Tata Indicom. Opening up of
international and domestic long distance telephony services are the major growth
drivers for cellular industry. Cellular operators get substantial revenue from these
services, and compensate them for reduction in tariffs on airtime, which along
with rental was the main source of revenue. The reduction in tariffs for airtime,
national long distance, international long distance, and handset prices has driven
demand.

Table 2 - History of Indian Telecommunications

Year

1851 First operational land lines were laid by the government near Calcutta (seat of
British power)

1881 Telephone service introduced in India

1883 Merger with the postal system

1923 Formation of Indian Radio Telegraph Company (IRT)

1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company
(IRCC)

1947 Nationalization of all foreign telecommunication companies to form the Posts,

Telephone and Telegraph (PTT), a monopoly run by the government's Ministry of
Communications

1985 Department of Telecommunications (DOT) established, an exclusive provider of

domestic and long-distance service that would be its own regulator (separate from
the postal system)

5
1986 Conversion of DOT into two wholly government-owned companies: the Videsh
Sanchar Nigam Limited (VSNL) for international telecommunications and
Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

1997 Telecom Regulatory Authority created.

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Future prospects

With 300 million telephone subscribers today, India now boasts of having the
second largest telecom network in the world after China. The country is adding
some 8.5 million to 10 million new mobile subscribers to the network every month
to also emerge as one of the fastest growing telecom markets in the world. The
telecom industry also saw an estimated $8.5 bn in investment flow in during
2006-07 alone, of which $550 million was in the form of foreign direct investment.
All major telecom handsets manufacturers - including Nokia, Samsung, Motorola
and LG - have their presence in India, so do leading global service companies
and infrastructure majors, such as Vodafone, Singapore Telecom, AT&T,
Ericsson, Alcatel and Siemens.

The next phase of growth, experts believe, will be in the country’s vast rural
areas - a development that, they say, would be more important than the Green
Revolution in India’s farm sector in the 1970s, when the country emerged as a
self-sufficient economy in food production, driven by the introduction of hybrid
seed varieties and new irrigation techniques. Also, with a tele-density of just eight
percent in rural India, as opposed to 50 percent in urban centres, the hinterland
offers good scope for expansion.

Little wonder, Nripendra Misra, Chairman of the Telecom Regulatory Authority of

India (TRAI), the sector’s watchdog, says in that the next few years would prove
to be even more exciting for the telecom industry in the country, not just for
domestic layers, but the global companies as well.

While the tele-density in the urban areas is over 50 percent, in rural areas it is
around eight percent only. Clearly, the future lies in the rural areas.
Telecommunication access to rural India is going to be the most important
development since the Green Revolution. Research analysts feel that mobile
voice is overwhelmingly the engine of growth followed by Next Generation
Network (NGN), broadband and data.

Norway based Telenor, world’s 7th largest telecom company is planning a foray
in the Indian market.Telenor has a subscriber base of 143 million and holds
majority stake in Bangladesh’s Grameenphone and operates in 12 countries.

Challenges

The challenge of the day is to search for new cost-effective ways to roll out
telecom services in rural areas. It means one has to choose proper and effective
technology for deployment and leverage on the use of available infrastructure to
reduce cost and time of role out of services. Those service providers who create
the right business would emerge winners and the rest would remain spectators.

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Connectivity of networks and cost of bandwidth are also important to facilitate
broadband usage. Availability of local application and content is another area of
concern. Most of the content available on website as of today is in English. The
content in local and regional language will increase interest of the local
population in broadband utilization.

The convergence of technologies and emergence of new applications is another

thrilling area. Lot of revolution is round the corner in broadcasting and
entertainment industries. The emergence of Internet protocol TV, mobile TV will
all change the scenario in the coming years.

Wireless technology is the future growth driver for which spectrum is the most
important input. The task of spectrum management in a multi user and multi
usage scenario is more daunting and crucial than ever before. In summary, if the
last few years in telecom were exciting, it will be even more exciting in the
coming years.

Sluggish pace of reform process.

Lack of infrastructure in semi-rural and rural areas, which makes it difficult to

make inroads into this market segment as service providers have to incur a huge
initial fixed cost.

Limited spectrum availability.

But notwithstanding these constraints, telecom sector has undergone a

revolution in the past decade and has played a major part in bridging the rural-
urban divide.

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Market structure and major players
Telecom sector today is one of the fastest growing sectors of all times.
Connections are increasing everyday and especially in the wireless sector the
growth is extremely fast. The Wireless subscribers have reached to 261.07
million as on 31stMarch 2008 as against 233.62 million subscribers in the
previous
quarter. During this quarter 27.45 million subscribers were added. The chart
below shows the increase iin the wireless base.

GSM and CDMA

The Indian wireless market is divided into GSM(Global Standards for Mobile
communication) and CDMA. There are 192.70 million GSM subscribers (73.81%)
and 68.3 million CDMA subscribers (26.19%) at the end of March 2008.

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The following pie chart gives an idea as to who are the major players in the
wireline market.

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 REGULATORY BODIES AND LEGAL ASPECTS

1. DEPARTMENT OF TELECOMMUNICATIONS
(DOOR SANCHAR VIBHAG)

1. Policy, Licensing and Coordination matters relating to telegraphs,

telephones, wireless, data, facsimile and telematic services and other like
forms of communications.
2. International cooperation in matters connected with telecommunications
including matters relating to all international bodies dealing with
telecommunications such as International Telecommunication Union
(ITU), its Radio Regulation Board (RRB), Radio Communication Sector
(ITU-R), Telecommunication Standardization Sector (ITU-T), Development
Sector (ITU-D), International Telecommunication Satellite Organization
(INTELSAT), International Mobile Satellite Organization (INMARSAT),
Asia Pacific Telecommunication (APT).
3. Promotion of standardization, research and development in
telecommunications.
4. Promotion of private investment in Telecommunications.
5. Financial assistance for the furtherance of research and study in
telecommunications technology and for building up adequately trained
manpower for telecom programme, including-

(a) assistance to institutions, assistance to scientific institutions and to

universities for advanced scientific study and research; and

(b) grant of scholarships to students in educational institutions and other

forms of financial aid to individuals including those going abroad for
studies in the field of telecommunications.

6. Procurement of stores and equipment required by the Department of

Telecommunications
7. Telecom Commission.
8. Telecom Regulatory Authority of India.
9. Telecom Disputes Settlement and Appellate Tribunal.
10. Administration of laws with respect to any of the matters specified in this
list, namely:-
a. The Indian Telegraph Act, 1885 (13 of 1885);
b. The Indian Wireless Telegraphy Act, 1933 (17 of 1933); and
c. The Telecom Regulatory Authority of India Act, 1997 (24 of 1997).
11. Indian Telephone Industries Limited.
12. Post disinvestment matters relating to M/s Hindustan Teleprinters Limited.
13. Bharat Sanchar Nigam Limited.
14. Mahanagar Telephone Nigam Limited
15. Videsh Sanchar Nigam Limited and Telecommunications Consultants
(India) Limited.
16. All matters relating to Centre for Development of Telematics (C-DOT).

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17. Residual work relating to the erstwhile Department of Telecom Services
and Department of Telecom Operations, including matters relating to-
a. cadre control functions of Group ‘A’ and other categories of
personnel till their absorption in Bharat Sanchar Nigam Limited;
b. administration and payment of terminal benefits.
18. Execution of works, purchase and acquisition of land debitable to the
capital Budget pertaining to telecommunications.

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2. TRAI

The Telecommunications Regulatory Authority of India or TRAI (established

1997) is the independent regulator established by the Government of India to
regulate the telecommunications business in India.

TRAI Mission: The mission of Telecom Regulatory Authority of India (TRAI) is to

ensure that the interests of consumers are protected and at the same time to
nurture conditions for growth of telecommunications, broadcasting and cable
services in a manner and at a pace which will enable India to play a leading role
in the emerging global information society.

ABOUT TRAI
The Telecom Regulatory Authority of India Act, 1997, as amended vide the
Telecom Regulatory Authority of India (Amendment) Act, 2000, specifies that the
Authority shall consist of a Chairperson and not more than two whole-time
Members and not more than two part-time Members. The Chairperson and
Members of the Authority are as follows:

Sh. Nripendra Misra Chairperson

Sh. A. K. Sawhney Member

Sh. R. N. Prabhakar Member

Prof. N. Balakrishnan Part-time Member

Dr. Rajiv Kumar Part-time Member

TRAI's mission is to create and nurture conditions for growth of

telecommunications in the country in a manner and at a pace which will enable
India to play a leading role in emerging global information society.

One of the main objectives of TRAI is to provide a fair and transparent policy
environment which promotes a level playing field and facilitates fair competition.

In pursuance of above objective 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 direction to the evolution of Indian telecom market
from a Government owned monopoly to a multi operator multi service open
competitive market.

The directions, orders and regulations issued cover a wide range of subjects
including tariff, interconnection and quality of service as well as governance of
the Authority.

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17
Responsibilities

Notwithstanding anything contained in the Indian Telegraph Act, 1885, the

functions of the Authority shall be to:

1. make recommendations, either suo motu or on a request from the

licensor, on the following matters, namely:
i. need and timing for introduction of new service provider;
ii. terms and conditions of license to a service provider;
iii. revocation of license for non-compliance for terms and conditions of
license:
iv. measures to facilitate competition and promote efficiency in the
operation of telecommunication services so as to facilitate growth in
such services.
v. technological improvements in the services provided by the service
providers.
vi. type of equipment to be used by the service providers after
inspection of equipment used in the network.
vii. measures for the development of telecommunication technology
and any other matter relatable to telecommunication industry in
general;
viii. efficient management of available spectrum;
2. discharge the following functions, namely:
i. ensure compliance of terms and conditions of license;
ii. notwithstanding anything contained in the terms and conditions of
the license granted before the commencement of the Telecom
Regulatory Authority (Amendment) Ordinance,2000, fix the terms
and conditions of inter-connectivity between the service providers;
iii. ensure technical compatibility and effective inter-connection
between different service providers.
iv. regulate arrangement amongst service providers of sharing their
revenue derived from providing telecommunication services;
v. lay down the standards of quality of service to be provided by the
service providers and ensure the quality of service and conduct the
periodical survey of such service provided by the service providers
so as to protect interest of the consumers of telecommunication
services;
vi. lay down and ensure the time period for providing local and long
distance circuits of telecommunication between different service
providers;
vii. maintain register of interconnect agreements and of all such other
matters as may be provided in the regulations;
viii. keep register maintained under clause (viii) open for inspection to
any member of public on payment of such fee and compliance of
such other requirement as may be provided in the regulations;
ix. ensure effective compliance of universal service obligations:

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3. levy fees and other charges at such rates and in respect of such services
as may be determined by regulations.
4. perform such other functions including such administrative and financial
functions as may be entrusted to it by the Central Government or as may
be necessary to carry out the provisions of this Act:
o Provided that the recommendations of the Authority specified in the
clause (a) of this sub-section shall not be binding upon the Central
Government:
o Provided further that the Central Government shall seek the
recommendations of the Authority in respect of matters specified in
sub-clauses (i) and (ii) of clause (a) of this sub-section in respect of
new licence to be issued to a service provider and the Authority
shall forward its recommendations within a period of sixty days from
the date on which that Government sought the recommendations:
o Provided also that the Authority may request the Central
Government to furnish such information or documents as may be
necessary for the purpose of making recommendations under sub-
clauses (i) and (ii) of clause (a) of this sub-section and that
Government shall supply such information within a period of seven
days from receipt of such request:
o Provided also that the Central Government may issue a licence to a
service provider if no recommendations are received from the
Authority within the period of specified in the second provision or
within such period as may be mutually agreed upon between the
Central Government and the Authority.
o Provided also that if the Central Government having considered
that recommendation of the Authority comes to a prima facie
conclusion that such recommendation cannot be accepted or needs
modifications, it shall, refer the recommendations back to the
Authority for its reconsideration, and the Authority may within fifteen
days from the date of receipt of such reference, forward to the
Central Government its recommendation after considering the
reference made by the Government. After receipt of further
recommendation, if any, the Central Government shall take a final
decision.

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POLICIES AND ACTS:

The telecom industry is regulated by the following acts:

1. TRAI ACT, 1997

2. INDIAN WIRELESS ACT, 1933
3. CABLE TELEVISION NETWORKS ACT, 1995

Also the following government policies help the government enjoy its control over
the telecos:

1. NATIONAL TELECOM POLICY,1994

2. NEW TELECOM POLICY, 1999
3. BROADBAND POLICY, 2004
4. Uplinking guidelines
5. Downlinking Guidelines
6. DTH guidelines

These policies are framed by the government and it is binding on all the telcos to
abide by these guidelines failing which they can be deprived of their license,
provided the companyis proven guilty in the court of law.

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 CURRENT ISSUES

1. Telecom regulator TRAI has questioned government's readiness to give a

licence to first time entrant in the telecom sector upon its successful bid for
3G, saying regulators' recommendations are a must for this. Successful
bidders, who do not have licence, would be given one and the terms and
conditions of the existing licence shall be amended accordingly, DoT had
said, while announcing the policy for 3G telephony. DoT had also said that
the new player would have to pay a licence fee of Rs 1,651 crore without
allocation of existing 2G spectrum "As this would require laying down the
terms and conditions of this new licence, including the annual licence fee,
therefore the Authority would like to draw the attention of DoT to the TRAI Act
wherein recommendation of TRAI is necessary. The DoT may revisit the
present guidelines for auction and allotment of spectrum for 3G telecom
services on this issue and some other matters mentioned . The DoT has
already initiated a process to appoint an independent agency for policing the
auctioning of spectrum for 3G services in a transparent manner and if the
policy was sent to TRAI for its recommendations the process may get
delayed.

2. Telecom regulator TRAI on Wednesday said the government criteria of

subscriber base for allotment of 3G spectrum to CDMA operators like RCom
and Tatas is Against The Principle Of equity.
"As various service providers have been given licences in different areas at
different periods of time, the Authority feels that keeping the subscriber base
as the criteria for deciding the priority of allotment shall be against the level
playing field and the principle of equity,"

3. DoT's decision was also opposed by the GSM operators saying the move
would give undue advantage to CDMA Operators. Department of Telecom
(DoT) may consider the auction route for allotment of spectrum in the 800
MHz band (spectrum for CDMA players) with the highest bid received from
GSM operators as the reserve price. This would ensure equity, level playing
field and optimal pricing in allotment of CDMA spectrum for 3G services. The
subscriber base of CDMA network of the service provider in any service area
is a result of different environment and cannot muster the "test of fairness if it
was to become the basis of priority".The government has allowed allotment of
1.25 MHz each to CDMA players based on subscriber base of respective
players.Besides, DoT will also relook into various other issues relating to 3G
policy. The DoT's proposal to issue licences to successful bidders in 3G
spectrum auction would also require regulator's recommendation. Sources in
the industry said that TRAI's proposal may derail the whole process especially

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 at a time when the players are preparing to offer next generation mobile
services and the government is planning to appoint an agency to overlook the
auctioning of spectrum. DoT has already issued an expression of interest to
appoint the agency. No official comment could be ascertained on TRAI's letter
to DoT secretary that whether DoT would re-look into the 3G policy
announced on August one.

4. The government would finalize the process of auctioning next generation 3G

mobile spectrum By September 30. Ahead of the 3G spectrum allocation
process, the government would invite request for proposals for rolling out
mobile number portability (MNP). In a week's time, preliminary procedure for
MNP seeking RFP from vendors will be out.
Government had recently announced the guidelines for 3G spectrum and
MNP, and had allowed foreign players to take part in the next generation
telecom space.

5. When Kumar Mangalam Birla, Chairman of the Aditya Birla Group, decided to
add Spice to its Idea network, little did he realize that the deal might have
more complications than he thought.After Spice buyout, Idea holds two
license in Punjab and Karnataka which is why the telecom department has
forced Idea to give up one of the two. Sanjeev Aga, Managing Director, Idea
Cellular, may hope for a refund but nothing will come his way since DoT's
babus are not willing to part with the license fee which Idea has already paid.
"They can't hold two licenses for the same circle so they will be able to hold
on to only one license. The government doesn't have a policy to refund
money. Sources suggest that Idea may surrender its own license and keep
Spice licenses in both, Punjab and Karnataka, circles.

6. The Delhi High Court on Friday dismissed a petition challenging government's

decision to allow telecom firms like Reliance Communication to offer services,
using both CDMA and GSM technology. The judgment was pronounced after
almost 6-month delay. But it was worth a wait for Anil Ambani, as the court
dismissed a petition that could have derailed his GSM ambitions.

The court as hearing a petition filed by GSM operators and their Association
COAI, against government's decision to let companies like RCom and Tata
Teleservices to use GSM spectrum, while retaining the CDMA spectrum.No
grounds have been made to upset the policy decisions of the Government of
India in respect to grant of licenses to upgrade crossover. That is, to upgrade
both CDMA and GSM to either parties

The ruling is timely. When most GSM operators have finally agreed to sign
interconnection agreement with RCOM for its GSM service, removing one more
hurdle in RCOM's way. But the legal battle between RCom and GSM still has one
more round to play out.

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After the high court's judgement, all eyes will now shift to TDSAT, where the final
hearing on the matter will start from September 4. What will be interesting to see
is what impact this judgement has on the hearing in TDSAT.

Telecom regulator TRAI recommended that National and International Long

Distance operators be permitted to offer STD and ISD voice calls using operator-
specific calling cards, a move that will give subscribers the freedom to choose a
service provider. In its recommendations to the government, TRAI said the
provision of calling cards would allow consumer to exercise choice of long
distance operator for the national and international calls.

"Through long distance calling cards customer can make long distance calls from
telephone of any access provider. Consumer can subscribe to any access
provider and still not be dependent on the access provider for long distance
calls," The Authority has therefore recommended amendment of NLD/ILD
operators licence conditions to allow them to access customers directly for
national and international long distance calls, respectively.

Competition brought in by carrier selection was considered important for bringing

in operational efficiencies in the long distance segment and also in offering
choice, quality and affordable prices to the consumers.

Telecom sector was in the process of opening up and availability of carrier

selection was considered an important pre-requisite for vibrant competition.

State-owned BSNL has set an ambitious target of starting next generation 3G

mobile services in December to take a lead over private operators and has
placed the purchase orders for the northern, eastern and western zones.In a
communication to all Chief General Managers of telecom circles or districts,
BSNL has asked them to take further necessary actions at their end so that 3G
services are launched by December, 2008. While announcing the 3G policy,
Communication and IT Minister A Raja had given the advantage to telecom
PSUs BSNL and MTNL of allocating 3G spectrum ahead of others with a
condition that both will pay the price equivalent to the highest bid. This was done
keeping in mind the cumbersome process to procure equipments by the PSUs
vis--vis by the private players."The 3G Purchase Orders (POs) issued earlier by
the circles of north and east zones were kept in abeyance because of non
availability of 3G spectrum. As the 3G spectrum has now been allocated to
BSNL, the 3G POs will become effective from the date of issuance of this letter
(August 11, 2008)," BSNL said in the letter.Whereas for the western and
southern zones, the POs for 3G equipments has been placed with the ITI under
reserve quota.While releasing the radio frequency for the PSU, the Department
of Telecom (DoT) has said that one time spectrum fee at a price equal to highest
bid as determined in respective areas is payable by BSNL."Further, BSNL is also
to pay annual spectrum usage charge of one per cent of Adjusted Gross
Revenue (AGR) after a period of one year from the date of earmarking of
frequencies that is August 8, 2008," BSNL said. State-owned BSNL has set an
ambitious target of starting next generation 3G mobile services in December to
take a lead over private operators and has placed the purchase orders for the

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northern, eastern and western zones.In a communication to all Chief General
Managers of telecom circles or districts, BSNL has asked them to take further
necessary actions at their end so that 3G services are launched by December,
2008.While announcing the 3G policy, Communication and IT Minister A Raja
had given the advantage to telecom PSUs BSNL and MTNL of allocating 3G
spectrum ahead of others with a condition that both will pay the price equivalent
to the highest bid.This was done keeping in mind the cumbersome process to
procure equipments by the PSUs vis--vis by the private players."The 3G
Purchase Orders (POs) issued earlier by the circles of north and east zones were
kept in abeyance because of non availability of 3G spectrum. As the 3G
spectrum has now been allocated to BSNL, the 3G POs will become effective
from the date of issuance of this letter (August 11, 2008)," BSNL said in the
letter.Whereas for the western and southern zones, the POs for 3G equipments
has been placed with the ITI under reserve quota.While releasing the radio
frequency for the PSU, the Department of Telecom (DoT) has said that one time
spectrum fee at a price equal to highest bid as determined in respective areas is
payable by BSNL."Further, BSNL is also to pay annual spectrum usage charge of
one per cent of Adjusted Gross Revenue (AGR) after a period of one year from
the date of earmarking of frequencies that is August 8, 2008," BSNL said.

24
Significant events in Indian Telcom Industry
• In 1851 the first operational land lines were laid by the government near
Calcutta (seat of British power).
• Telephone services were introduced in India in 1881
• In 1883 telephone services were merged with the postal system. Indian
Radio Telegraph Company (IRT) was formed in 1923.
• After independence in 1947, all the foreign telecommunication companies
were nationalized to form the Posts, Telephone and Telegraph (PTT), a
monopoly run by the government's Ministry of Communications.
• Formation of DOT (Department of telecommunications) out of the
Department of Posts in 1980s.
• Formation of two DOT owned corporations in 1986 :Mahanagar Telephone
Nigam Limited (MTNL), to serve Delhi and Bombay, and Videsh Sanchar
Nigam Limited (VSNL), to operate international telecom services.
• In 1994, the government released its National Telecommunications Policy
(NTP-94), which allowed private fixed operators to take part in the Indian
market for the first time (cellular operators had been allowed into the four
largest metropolitan centers in 1992)
• 9 government in 1997 set up the Telecom Regulatory Authority of India
(TRAI), the nation’s first independent telecom regulator.
• New National Telecom Policy was adopted in 1999 and cellular services
were also launched in the same year.
• The corporatization of the DOT and the creation of a new state-owned
telecom company, Bharat Sanchar Nigam Ltd (BSNL), in 2000;
• The opening up of India’s internal long-distance market in 2000, and the
subsequent drop in long-distance rates as part of TRAI’s tariff rebalancing
exercise;
• The termination of VSNL’s monopoly over international traffic in 2002,
and the partial privatization of the company that same year, with the Tata
group assuming a 25% stake and management control
• The gradual easing of the original duopoly licensing policy, allowing a
greater number of operators in each circle;
• The legalization, in 2002, of IP telephony (a move that many believe
was held up due to lobbying by VSNL, which feared the consequences on
its international monopoly);
• The introduction in 2003 of a Calling Party Pays (CPP) system for cell
phones, despite considerable opposition (including litigation) by fixed
operators;
• And, more generally, the commencement of more stringent
interconnection regulation by TRAI, which has moved from
interoperator“negotiations-based” approach (often used by the stronger
operator to negotiate ad infinitum) to a more rules-based approach.
All of these events have created an impressive forward-momentum in
Indian telecommunications, resulting in a vigorously competitive and fast-
growing sector.

25
 MICRO ANALYSIS - RELIANCE COMMUNICATIONS

A DREAM COME TRUE

The Late Dhirubhai Ambani dreamt of a digital India
— an India where the common man would have
access to affordable means of information and
communication. Dhirubhai, who single-handedly
built India’s largest private sector company virtually
from scratch, had stated as early as 1999: “Make
the tools of information and communication
available to people at an affordable cost. They will
overcome the handicaps of illiteracy and lack of
mobility.”
It was with this belief in mind that Reliance
Communications i.e. formerly Reliance Infocomm started laying 60,000 route
kilometres of a pan-India fibre optic backbone. This backbone was commissioned
on 28 December 2002, the auspicious occasion of Dhirubhai’s 70th birthday,
though sadly after his unexpected demise on 6 July 2002.
Reliance Communications has a reliable, high-capacity, integrated both wireless
and wire line and convergent digital network. It is capable of delivering a range of
services spanning the entire infocomm value chain, including infrastructure and
services — for enterprises as well as individuals, applications, and consulting.
Today, Reliance Communications is revolutionizing the way India communicates
and networks, truly bringing about a new way of life.
Reliance Communications is one of India's largest providers of integrated
communications services. The company has more than 20 million customers and
serves individual consumers, enterprises, and carriers, providing wireless,
wireline, long distance, voice, data and internet communications services through
a number of operating subsidiaries. The company sells communications and
digital entertainment products and services through its chain of Reliance
WebWorld retail outlets. The company's Reliance Infocomm subsidiary provides
wireless communications services throughout India. Reliance Communications is
part of the Reliance - Anil Dhirubhai Ambani Group.

26
HISTORY
Reliance Infocomm is the outcome of the late Dhirubhai Ambani's (1932-2002)
dream to herald a digital revolution in India by bringing affordable means of
information and communication to the doorsteps of India's vast population.
Dhirubhai Ambani charted out the mission for Reliance Infocomm in late 1999.
He saw in the potential of information and communication technology an
opportunity for India to leapfrog over its historical legacy of backwardness and
underdevelopment. Between 1999 to 2002 Reliance Infocomm built the fiber
backbone for India — 60,000 kilometres of fibre optic backbone, crisscrossing
the entire country. This network was commissioned on December 28, 2002, the
70th birth-anniversary of Dhirubhai. This day also marked his first birth-
anniversary after his demise on July 6, 2002.

FOUNDERS:
Few men in history have made as dramatic a contribution to their country’s
economic fortunes as did the founder of Reliance, Sh. Dhirubhai H Ambani.
Fewer still have left behind a legacy that is more enduring and timeless. As with
all great pioneers, there is more than one unique way of describing the true
genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud
patriot, the leader of men, the architect of India’s capital markets, the champion
of shareholder interest.
But the role Dhirubhai cherished most was perhaps that of India’s greatest wealth
creator. In one lifetime, he built, starting from the proverbial scratch, India’s
largest private sector enterprise.

VISION:
“We will leverage our strengths to execute complex global-scale projects to
facilitate leading-edge information and communication services affordable to all
individual consumers and businesses in India. We will offer unparalleled value to
create customer delight and enhance business productivity. We will also
generate value for our capabilities beyond Indian borders and enable millions of
India's knowledge workers to deliver their services globally.”

BUSINESS
Reliance Communications is the flagship company of the Anil Dhirubhai Ambani
Group (ADAG) of companies. Listed on the National Stock Exchange and the
Bombay Stock Exchange, it is India’s leading integrated telecommunication
company with over 55 million customers.
Their business encompasses a complete range of telecom services covering
mobile and fixed line telephony. It includes broadband, national and international
long distance services and data services along with an exhaustive range of
value-added services and applications. Their constant endeavour is to achieve
customer delight by enhancing the productivity of the enterprises and individuals
they serve.
Reliance Mobile (formerly Reliance India Mobile), launched on 28 December
2002, coinciding with the joyous occasion of the late Dhirubhai Ambani’s 70th
birthday, was among the initial initiatives of Reliance Communications. It marked
the auspicious beginning of Dhirubhai’s dream of ushering in a digital revolution
in India. Today, they can proudly claim that they were instrumental in

27
harnessing the true power of information and communication, by bestowing it in
the hands of the common man at affordable rates.
They endeavour to further extend their efforts beyond the traditional value chain
by developing and deploying complete telecom solutions for the entire spectrum
of society.

RELAINCE GROUP:
Reliance – Anil Dhirubhai Ambani Group, an offshoot of the Reliance Group
founded by Shri Dhirubhai H Ambani (1932-2002), ranks among India’s top three
private sector business houses in terms of net worth. The group has business
interests that range from telecommunications (Reliance Communications
Limited) to financial services (Reliance Capital Ltd) and the generation and
distribution of power (Reliance Energy Ltd). Reliance – ADA Group’s flagship
company, Reliance Communications, is India's largest private sector information
and Communications Company, with over 55 million subscribers. It has
established a pan-India, high-capacity, integrated (wireless and wireline),
convergent (voice, data and video) digital network, to offer services spanning the
entire infocomm value chain. Other major group companies — Reliance Capital
and Reliance Energy — are widely acknowledged as the market leaders in their
respective areas of operation.

28
KEY PERSONNEL
Chairman's Profile: Anil D. Ambani
Regarded as one of the foremost corporate leaders of contemporary India,Shri
Anil D Ambani, 48, is the chairman of all listed companies of the Reliance ADA
Group, namely, Reliance Communications, Reliance Capital, Reliance Energy
and Reliance Natural Resources limited.
He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of
Information and Communication Technology, Gandhi Nagar, Gujarat.
Till recently, he also held the post of Vice Chairman and Managing Director of
Reliance Industries Limited (RIL), India’s largest private sector enterprise.

Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was
centrally involved in every aspect of the company’s management over the next
22 years.
He is credited with having pioneered a number of path-breaking financial
innovations in the Indian capital markets. He spearheaded the country’s first
forays into the overseas capital markets with international public offerings of
global depositary receipts, convertibles and bonds. Starting in 1991, he directed
Reliance Industries in its efforts to raise over US$ 2 billion. He also steered the
100-year Yankee bond issue for the company in January 1997.
He is a member of:

Wharton Board of Overseers, The Wharton School, USA

Central Advisory Committee, Central Electricity Regulatory Commission

Board of Governors, Indian Institute of Management, Ahmedabad

Board of Governors Indian Institute of Technology, Kanpur
In June 2004, he was elected for a six-year term as an independent member of
the Rajya Sabha, Upper House of India’s Parliament a position he chose to
resign voluntarily on March 25, 2006.
Awards and Achievements:
Conferred the ‘CEO of the Year 2004’ in the Platts Global Energy Awards
Rated as one of ‘India’s Most Admired CEOs’ for the sixth consecutive year in
the Business Barons – TNS Mode opinion poll, 2004
Conferred ‘The Entrepreneur of the Decade Award’ by the Bombay Management
Association, October 2002
Awarded the First Wharton Indian Alumni Award by the Wharton India Economic
Forum (WIEF) in recognition of his contribution to the establishment of Reliance
as a global leader in many of its business areas, December 2001
Selected by Asiaweek magazine for its list of ‘Leaders of the Millennium in
Business and Finance’ and was introduced as the only ‘new hero’ in Business
and Finance from India, June 1999.

29
BOARD OF DIRECTORS:

Shri Anil D. Ambani - Chairman

Prof. J Ramachandran

Shri S.P. Talwar

Shri Deepak Shourie

Shri A.K.Purwar

Corporate Governance
Organizations, like individuals, depend for their survival, sustenance and growth
on the support and goodwill of the communities of which they are an integral part,
and must pay back this generosity in every way they can... This ethical
standpoint, derived from the vision of their founder, lies at the heart of the CSR
philosophy of the Reliance – ADA Group. While they strongly believe that their
primary obligation or duty as corporate entities is to their shareholders – they are
just as mindful of the fact that this imperative does not exist in isolation; it is part
of a much larger compact which they have with their entire body of stakeholders:
From employees, customers and vendors to business partners, eco-system, local
communities, and society at large.

Reliance evaluate and assess each critical business decision or choice from the
point of view of diverse stakeholder interest, driven by the need to minimize risk
and to pro-actively address long-term social, economic and environmental costs
and concerns.

For reliance, being socially responsible is not an occasional act of charity or that
one-time token financial contribution to the local school, hospital or
environmental NGO. It is an ongoing year-round commitment, which is integrated
into the very core of our business objectives and strategy. Because they believe
that there is no contradiction between doing well and doing right. Indeed, doing
right is a necessary condition for doing well.

30
Milestones
2008
January 12 Reliance Communications receives Start-up GSM Spectrum
January 16 Yahoo partners with Reliance Communications to provide Yahoo One
Search for its CDMA and GSM customers.
January 31 RCOM's Q 3 Net Profit increases by 48.5% and Revenues Up by 29.8 %.
Remains the most profitable Telecom Company in India.
February 5 Reliance Mobile strengthens its religious content portfolio on Mobile by tie-
up with Sadhana TV
February 14 RCOM in partnership with CanvasM, launches Mulitplayer Mobile Games
February 19 HDFC Bank ties up with RCOM, turns every Reliance Mobile into a credit
card
February 27 Reliance Communications consolidates Global Telecom Business under
“Business Globalcom”. Reliance Communications forays into International
Mobile Market with GSM License in Uganda.
March 3 Reliance Communications drops prices of Internet Data Cards
March 27 Corporation Bank Launches Banking Services on Reliance Mobile World
April 1 Reliance Communications forays into IT space, launches Reliance
Technology Services Company
April 9 RCOM launches Educational Portal on Reliance Mobile Phones
April 25 Reliance Globalcom unit Reliance Infocom BV, Netherlands acquires
Global WiMAX Operator eWave World
April 29 Reliance Communications Announces Unlimited Free STD calls
April 30 Reliance Globalcom Launches Passport Global SIM
RCOM's Net Profit up by 70.8% to Rs 5,401 crore
May 2 Reliance Communications’ Net Profit up by 70.8% to Rs 5,401 crore (US$
1,350 million), Revenues higher by 31.8% to Rs.19, 068 crore (US$ 4,765
million) and EBIDTA increases by 43.3% to Rs.8, 199 crore (US$ 2049
million)
May 12 Reliance Communications and Alcatel form Joint Venture to offer Managed
Network Services to telcos across the globe
May 26 Reliance Globalcom acquires UK based VANCO Group Limited
June 24 Reliance Globalcom, Stealth Communications forge Strategic Alliance to
extend VOIP Network across 50 countries
July 12 CA Exam Results on Reliance Mobile
July 22 Reliance Communications Mobile Subscriber base crosses 50 Million
July 31 Reliance Communications (RCOM) announces its financial results for the
first quarter ended June 30, 2008. Net Profit up by 23.9% to Rs. 1,512 crore
(US$ 352 million)

31
 SWOT ANLYSIS RELIANCE COMMUNICATION

Strengths :
1. The Reputation Assessment shows that the Value Added Service (VAS)
offered by RCL,
Through its portal Reliance World, is rated the best amongst all such
services.
2. Strongest network among CDMA service providers
3. Reliance is on top in case of value added services
4. The public expressed awareness about the Promotional Offers floated by
Reliance in the market.
5. The Financials of the company are perceived to be good in general. Also,
the people have confidence in the Future growth prospects of the company,
which is an indicator of favourable Reputation
6. It should be noted that the act of making a phone call cheaper than a
postcard as well as the ‘500’ scheme is viewed as a CSR Initiative by few.
However, it was strictly a Promotional activity, from the perspective of the
company, aimed at converting masses into customers, and obtain from them
a monthly remuneration.
7. More than 55 million customers (July 2008). 2nd Largest cellular provider
in India, supplies broadband and telephone services and other
telecommunications services to both domestic and corporate customers. The
strong subscriber base over 10million subscriber's in their kitty.
8. The company has covered the entire Indian nation with its network. This
has underpinned its large and rising customer base
9. Other stakeholders in RELIANCE COMMUNICATION include HTC, Nokia -
and Samsung, with whom they hold a strategic alliance. This means that the
business has access to knowledge and technology from other parts of the
telecommunications world.
10. Mobile with in the reach of common man. Affordable schemes

Weaknesses:
1. The Billing aspect, however, has been rated the lowest and needs to be
worked upon
because it can be a strong influencer in the choice of a Telecom Service.
2. In addition to this, since all the Service Providers rank extremely low on
CSR Initiative, RCL can tap this opportunity to raise its Reputation in the
Target Markets.
3. The study also reveals that they are perceived to be the most dishonest
amongst the employees of all the Telecom Service Providers. This is further
represented by the lowest rank assigned to Reliance Communications for its
Corporate Ethics & Transparency. The company, therefore, should seek to
muster more confidence and support for itself.
4. In GSM service RELIANCE COMMUNICATION is still poor.
5. Restricted towards mobility through WLL

32
Opportunities:
1. RCOM boomed in CDMA by their services same can be done by taking
over in GSM services
2. This year the focus will be on rural applications for transportation, m-
commerce, health care services, governance, education, information and
location based services that cater to the needs of rural population.
3. RELIANCE COMMUNICATION also announced ambitious roll- out targets,
including commitment to a nationwide WiMax network and the expansion of
its infrastructure base from 13,000 towers to 33,000 by the end of the year.

4. The towers would have the capability to handle all technologies like GSM,
CDMA, WiMax and 3G,

Threats:
1. Internal problem of two brothers some time creating problem for Reliance
communication.
2. In GSM service Airtel is big threat for Reliance communication as well as
TATA telecom is big threat in CDMA also new CDMA service of VIRGIN
introducing to market.
3. RELIANCE COMMUNICATION could also be the target for the takeover
vision of other global telecommunications players that wish to move into
the Indian market.

33
 4P’s

PRODUCTS

Reliance Communications has a reliable, high-capacity, integrated (both

wireless and wireline) and convergent (voice, data and video) digital network. It is
capable of delivering a range of services spanning the entire infocomm
(information and communication) value chain, including infrastructure and
services — for enterprises as well as individuals, applications, and consulting.

Mobile Office Centerex

Wireless Phone E1DID
Wireless Terminal One Office Duo
Black Berry Office Conferencing
Roaming Reliance PCO
Broadnet Toll-Free
Reliance Landline ITFS
Reliance Net connect Broadband
Reliance Mobile World Business Broadband
Internet
Reliance India cell Leased Line
Reliance Passport IPLC
Reliance IPTV VPN

PRICE

The prices of different services and products vary.

34
PLACE

Reliance has been operating successfully in India. It has large number of

customer under its roof.

PAN India network and town coverage

• 80,000 kms of optic fibre backbone.

• Wireless network covering over 20,000 towns

and 4.5 lakh villages and counting.

• 15, 000 Base Transceiver Stations (BTSs)

across the country.

• Network with superior reliability.

• All this managed from our state-of-the-art national network operations

centre in Mumbai.

Reliance has acquired following markets in India.

Ahmedabad Bhopal
Bhubaneshwar Chandigarh
Chennai Delhi
Dehradun Panjim
Hyderabad Jaipur
Kolkatta Lucknow
Patna Mumbai
Thiruvananthapuram Gangtok

PROMOTION

Reliance communications is aggressively promoting its products on all the

leading TV channels at prime times. It covers the 10 second time slots between
7pm to 10pm, which are the most costliest time slots. Moreover, it is also a co-
sponsor for many cricket matches played in and out of the country. Reliance has
fairly encashed the love for cricket amongst the Indians. For the recent IPL
matches it paid Rs.16 lakhs for a 10 second slot. But the response it got from
that was overwhelming.

Reliance is tapping its every potential resource to advertise its brand. It

advertises its brand through mass media set up by Reliance group itself.

35
Reliance communications is being advertised in the ADLABS multiplexes , on
Radio- BIG FM, on T.V – DTH service by the name BIG TV, which are all
subsidiaries of Anil Dhirubhai Ambani Group.

36
HR Code of Conduct
(adopted by the Company)
Reliance – Anil Dhirubhai Ambani Group of Companies continually reviews
corporate governance best practices to ensure that they reflect global
developments. It takes feedback into account, in its periodic reviews of the
guidelines to ensure their continuing relevance, effectiveness and
responsiveness to the needs of local and international investors and other
stakeholders.
The Code of Conduct(s) and Business Policies adopted by the Reliance – Anil
Dhirubhai Ambani Group (ADAG) Companies are given here.
1. Values and Commitments
2. Code of Ethics
3. Business Policies
4. Ethics Management
5. Prevention of Sexual Harassment
6. Policy on Insider Trading

1. Values and Commitments

Introduction
Every significant management decision has ethical value dimensions. Managing
ethics is particularly relevant for Reliance – ADAG Companies today because it
is critical to understand and manage highly diverse values in the workplace.
Attention to business ethics is critical during times of fundamental change – times
much like those faced now by businesses like ours. In times of such fundamental
change, values that were previously taken for granted are now strongly
questioned. Many of these values are no longer followed. Consequently, there is
no clear compass to guide us through complex dilemmas about what is right or
wrong.

2. Policy on Code of Ethics

Background

37
Reliance – RELIANCE – ADAG Companies’ Code of Ethics is in alignment with
its values and commitments. The essence of this code is that each employee
should conduct the Company’s business in a way that upholds its values and
commitments. This code expects every employee to conduct business with
integrity, in compliance with applicable laws, and in a manner that excludes
consideration of direct or indirect personal advantage / gains. It is the individual
responsibility of each one of Reliance – RELIANCE – ADAG Companies’
employee to ensure that all of us are aware of these values, commitments, and
procedures, and behave in accordance with the spirit as well as the letter of this
code. Reliance – ADAG Companies recognize that it is vital that the behaviour of
its employees matches the high intentions and values. Hence, adherence to all
the elements of this code and the accompanying principles and procedures is
necessary. The principles and procedures in this Code of Ethics apply to all
material transactions, large or small, and describe the conduct expected from
every Reliance –ADAG Companies’ employee.

3. Business Policies

I. Fair Market Practices

II. Inside Information
III. Financial, Records and Accounting integrity
IV. External Communication
V. Work Ethics
VI. Personal Conduct
VII. Health safety environment
VIII. Quality

4. Ethics Management

ADAG Companies have established an elaborate Ethics Management

Organization to underscore our commitment to ethical conduct throughout our

38
Company. It is a key part of vigorous corporate-wide efforts to promote a positive
and ethical work environment. Ethics Compliance Process Reliance – ADAG
Companies Code of Ethics and Business Policies are applicable to:
• all personnel in the management cadre; and
• all full-time consultants, representatives, suppliers, contractors and agents
Applicability of the code and policies to other employees will be reviewed at a
later date.

5. Policy on Prevention of Sexual Harassment

1.1. Objective to promote a productive work environment;

1.2 not to tolerate verbal or physical conduct of a sexual nature by any employee
that harasses, disrupts, or interferes with another’s work performance or that
creates an intimidating, offensive, or
hostile environment. Harassment that is unchecked has the potential to hurt the
employer’s operations through decreased productivity and increased employee
turnover.

6.Code of Conduct for Prevention of Insider Trading

The Policy and Obligations

The Company endeavors to preserve the confidentiality of un-published price
sensitive information and to prevent misuse of such information. The Company is
committed to transparency and fairness in dealing with all stakeholders and in
ensuring adherence to all laws and regulations. Every director, officer,
designated employee of the Company has a duty to safeguard the confidentiality
of all such information obtained in the course of his or her work at the Company.
No director, officer, designated employee may use his or her position or
knowledge of the Company to gain personal benefit or to provide benefit to any
third party. To achieve these objectives, Reliance Communications Limited

39
hereby notifies that this Code of conduct is to be followed by all Directors,
officers, designated employees and connected persons.

40
CORPORATE SOCIAL RESPONSIBILITY

Organizations, like individuals, depend for their survival, sustenance and growth
on the support and goodwill of the communities of which they are an integral part,
and must pay back this generosity in every way they can...

This ethical standpoint, derived from the vision of our founder, lies at the heart of
the CSR philosophy of the Reliance – ADA Group.

While they strongly believe that their primary obligation or duty as corporate
entities is to their shareholders – they are just as mindful of the fact that this
imperative does not exist in isolation; it is part of a much larger compact which
they have with their entire body of stakeholders: From employees, customers
and vendors to business partners, eco-system, local communities, and society at
large.

They evaluate and assess each critical business decision or choice from the
point of view of diverse stakeholder interest, driven by the need to minimize risk
and to pro-actively address long-term social, economic and environmental costs
and concerns.

For them, being socially responsible is not an occasional act of charity or that
one-time token financial contribution to the local school, hospital or
environmental NGO. It is an ongoing year-round commitment, which is integrated
into the very core of our business objectives and strategy.

Because they believe that there is no contradiction between doing well and doing
right. Indeed, doing right is a necessary condition for doing well.

Specific community requirements

• The company has constructed an Anti Sea Erosion Bund with a length of
700 meters at Diwa Dandi. The bund has effectively stopped erosion of
soil and has saved the livelihood of the villagers. The total expenditure on
the construction of the bund amounted to Rs. 75 lacs.

• Construction of Water Storage check dams under ground water

conservation programme at Saravali / Savata / Ashagad villeage around
Dahanu . With these check dams more than 12,000 nearby villagers are
benefited

41
 • The Fly Ash Brick making project was instituted in 1995 and provides
employment to many tribal youth.

• Mobile dispensary van for local tribals for serving community in far lung
areas under Vanvasi kalyan Kendra , Talasari

Educational Initiatives

In keeping with the corporate belief that education and training are primary
enablers for the society, the Dahanu TPS has actively contributed towards
making quality education available in the vicinity of the company's operations.

Specific Educational initiatives undertaken by the company include:

• Establishing DTPS Junior College of Science in the year 1998. and DTPS
junior college of Arts in 2004.

42
 • The Building and handing over of 8 Municipality schools to the Zilla
Parishad at Dahanu.

• The construction of an Audiometric Room & Computer lab for Dumb and
Deaf school children.

• An annual program that has been in place since 1995, under school
children are given Stationary & Educational material free of cost.
• The Annual Best Teacher Award in association with the Rotary Club. This
program has been in place since 1995 and over this period 50 teachers
have been conferred the Award.
• Institution of the Merit Scholarship for Eng. and Medical Students since
1998 in association with Rotary Club. Eight students have been awarded
this scholarship to date.
• A Scholarship for tribal students from the Industrial Training Institute,
Vanagaon, was instituted in 1990, for promoting enrollment in vocational
courses.
• An ongoing program to distribute note books at subsidized rates. This
initiative is undertaken by the company in association with the Rotary club
and has been in place since 1995.

Health Initiatives

Community health is one of the prime areas of the company's social concerns
and the company is an active contributor to community health programs.

• An annual Health Check Up Camp has been instituted by the company

and a local NGO for the benefit of the rural community in the vicinity of the
plant.
• The company sponsors an annual Eye Check Up and Cataract Operation
Camp, in association with the Lions Club.

43
 • Since 1996, the company has been an active participant in the Annual
Pulse Polio Program.
• To ensure supply of clean and fresh drinking water, the company has
undertaken construction & maintenance of 70 Tube Wells in 30 villages.
This has brought welcome relief to the villagers who previously had to
walk long distances to get fresh drinking water.

Total Annual Spending on Education, Health and Community Development

Year Education Health Community Total

Expenses Expenses Expenses ( Rs. )
(in Rs.) (in Rs.) (in Rs.)
2000 11,24,469/- 55,300/- 30,39,498/- 42,19,267/-
2001 3,03,028/- 1,36,646/- 3,16,520/- 7,56,194/-
2002 5,42,608/- 1,22,700/- 75,95,638/- 82,60,946/-
2003 2,74,000/- 5,75,000/- 5,87,767/- 14,67,767/-
2004 1,47,000/- 1,59,397/- 26,91,457/- 29,97,854/-
2005 5,05,000/- 45,724/- 25,37,520/- 30,88,244/-

So far company has spent more than 3 crores of rupees as a part of CSR
activities.

44
Future Plans of Reliance telecommunications
Reliance Communication to enter GSM services
Close on the heels of defence authorities agreeing to vacate 45 mhz quantity of
spectrum, a crucial input for further growth of telecom services, Anil Ambani's
Reliance Communication has approached the government seeking Spectrum in
1800 mhz frequency to start GSM services in the country.

If the application of Reliance is considered favourably, the company would

immediately get a pair of 5 mhz of spectrum in 1800 mhz .(a frequency for GSM
operators)

The development is significant as the company has been offering CDMA-based

mobile services in the country with nearly a subscriber base of 20 million. The
company would have the flexibility of offering both technologies or migrating to
GSM over a period of time.

Reliance Telecom, a subsidiary of Reliance Communication, has been offering

GSM-based services in six circles including Kolkata, West Bengal, Madhya
Pradesh, Orissa, Bihar and North-East while the parent company operates
CDMA services in these circles as well as rest of India.

If Reliance' application is cleared, the company would get two pairs of 5 mhz
Spectrum immediately, thereby getting a big chunk of the scarce commodity.

Although CDMA is considered a Spectrum efficient technology, worldwide GSM

technology has been opted as CDMA operators are obliged to pay a hefty royalty
to developers of CDMAtechnology.

The royalty in India is as high as 7 per cent each on equipment as well as

handset compared to a miniscule two per cent in China and nil royalty in US.

If Reliance Communication plans to start GSM services, the company would

have to pump in as much as Rs 1,200 crore in two cities of Delhi and Mumbai
alone to set up the network, going by the industry estimates.

Going by this and the subscriber base, it may be difficult for the company to
migrate fully on to GSM operations immediately but this could become a
possibility in case of lower additional investment over and above the existing
network.

The company has been talking to various GSM equipment vendors to look at
various options.

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Recent Events
19-MAR-08
Reliance Communications is set to acquire a Europe-based specialty WiMax
operator,

21-FEB-08
Reliance Communications, announced the acquisition of Uganda based Anupam
Global Soft (U), a company holding public infrastructure provider license (PIPL)
and public service provider license (PSPL) issued by Uganda Communications
Commission. The acquisition, made through a subsidiary of Reliance
Communications, marks the first step in the company`s plans in the international
mobile market. Under the existing licenses, Reliance Communications targets to
offer mobile, fixed line, internet, national and international long distance services,
in addition to WiMax and Wifi services in Uganda.

20-FEB-08
Reliance Communications, announced today a new umbrella brand `Reliance
Globalcom` for all its Global initiatives. Reliance Globalcom brings under its fold
a diverse portfolio of global communications business services, including global
voice, managed network, carrier ethernet, and fiber capacity businesses into a
single group.

05-FEB-08
Reliance Communications said on Tuesday that its arm has been granted Unified
Access Service Licenses (UASL) for providing CDMA services in the Assam and
North East regions.

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 Suggestion and Conclusion

Indian market ripe for 3G spectrum

India has a large potential 3G user base in the almost 70-million wireless
subscribers, who use their handsets to access data services on the Web. With
such a large captive audience for 3G data applications, the scenario is different
from that of other 3G markets like Europe, where operators first rolled out high-
bandwidth applications and then tried to rope in subscribers to use them.

According to the TRAI, India had about 58 million subscribers who accessed the
internet on their handsets at the end of December 2007, compared with about
46.4 million at the end of October. Industry estimates place the figure for such
wireless internet users at about 70 million by the end of March 2008, considering
the country added over 30 million mobile users during the first three months of
2008.

Telcos say the need to access high-speed internet on the mobile handset will
prompt subscribers to shift quickly to 3G when it is rolled out. “India’s internet
penetration is just 4% today. Just like most people in India experienced voice
calls for the first time on their mobile handsets, rather than a fixed line, many in
India will also access high-speed internet for the first time on the mobile phones
with 3G,” explained Bharti Airtel president (mobility) Sanjay Kapoor.

According to Indian Cellular Association (ICA) president Pankaj Mohindroo, only

about 5% of India’s 250 million mobile users currently have handsets that can
work on 3G spectrum frequencies such as 2,100 MHz. He said the number of
people who opt for 3G services would be determined by the content. ICA
represents all handset vendors in the country.
The market for 3G in the country is huge.

Unlike most other countries, we are not looking at 3G services as a premium

service but as an extension of 2G. Our broadband penetration is abysmal, so
there will be a great demand for broadband on the mobile. Most importantly, rural
India will need 3G more. The 3G handset prices are already low.

He, however, warned that the shift towards 3G would depend on affordability,
which would be determined by the price that operators would have to pay for
radio frequencies.

Hence the early birds will get the advantage and that is why Reliance should start
providing the 3G services.

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