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HCL INFOSYSTEMS LIMITED

HCL & Nokia – Long Term Distribution Strategy


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HCL & Nokia – Long Term Distribution Strategy

HCL Nokia Relationship :


™ HCL & Nokia have served mobile customers in the country for over 10 years
¾ Strong growth in the Indian GSM handset market
¾ Strong market share growth
¾ HCL addresses a large part of Nokia services
¾ Over 180 care centers owned / franchised
Market Scenario :
™ Mobile subscriber base touched 84Mn as on Feb 06.
™ Market getting closer to 4/4.5 Mn phone market of PRC
™ Mobile penetration getting into next phase of growth
ƒ Major portion of growth from smaller towns & remote locations
ƒ Industry estimates suggest that market shall grow to 5000 cities & 3.5 Lac
villages by 2007

Next phase of growth requires long term strategy :


™ Penetrate deeper into Smaller & Rural locations
™ Preserve Market share
™ Address Competition
™ Align to Nokia’s global policy
ƒ Nokia has a global policy of balanced channel mix
HCL & Nokia – Long Term Distribution Strategy

Revised agreement between HCL & Nokia :


™ Agreement extended for the next several years
™ HCL & Nokia have decided to jointly address the GSM distribution in the country
¾ A “balanced channel mix approach” for Nokia
¾ Intention to equally address the business volumes
¾ To be carried out in a staggered manner over a period of time, around 1.5 yrs
™ No change in Nokia services arrangement
ƒ HCL continues to service a large part of services requirement

Implementation Plan :
™ State wise allocation of territories
ƒ Either Nokia or HCL to be present in each state
ƒ To ensure complete efficiency of Logistics & Distribution process
™ Implementation started with pilot in two cities, Mumbai & Bangalore
™ Country wide bifurcation to be decided between implementation
teams in due course
Indian Cellular Market – Looking Ahead…
Mobility on Upward trend
4.00
3.52
GSM NET ADDS
3.50 3.18
CDMA NET ADDS
3.00 2.33
3.17
2.50 2.03 2.11
1.95
2.00

1.50
1.96 1.18 1.26
1.57
0.78
1.00
0.53 0.69 1.17 1.17
0.43
0.50
0.51
0.00
SEPT'04

OCT'04
AUG'04

NOV'04

Dec'04

Jan'05

Feb'05

Mar'05

May'05

Jun'05

Jul'05

Oct'05

Nov'05

Dec'05

Jan'06

Feb'06
Sept'05
Apr'05

Aug'05
-0.50

-1.00

Indian Mobile Market - Key Growth Drivers...

ƒ Continuously falling tariffs and increasing coverage


ƒ Increase in Replacement market demand
ƒ Expected introduction of 3G in 2006 will result in voice capacity (4-5 times) over 2G
ƒ Multiple ownership of mobile phones by individuals and households
ƒ Innovative schemes like free lifetime incoming calls, lower STD calls etc
ƒ Vast untapped markets

Tele-density reaches 12.28% (Total Sub Base crosses 134 million)


Subscriber Base Growth : India Vs China

500
China (Dec 31st) 383
400 335
India (Mar 31) 269
300 210
200 145
85
100 75
6 13 34
0 0.34 0.88 1.2 1.88 4
1997 1998 1999 2000 2001 2002 2003 2004 2005
(Dec)

™ China started mobile service in 1988


™ India started mobile service in 1995
™ In 2001 India surpassed growth rate of China

GSM & CDMA have together taken mobile net adds to 4 Mn + close to China.
At 4.3 Mn mobile adds (3.16Mn – GSM, and 1.17Mn – CDMA) in Feb’06, now
on par with the monthly additions in China (avg 4.8 Mn in Jan – Oct)