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Third Party Passive Infrastructure sharing is a new concept in the Indian telecom industry and is yet to be successfully proven. Thus achieving scalability could face problems.

Infrastructure sharing in the wireless telecom sector is a new concept in India. The growth phase in the cellular subscriber base in India is expected to continue. With an increasing pressure on average revenue per user and declining usage charges, the thrust among the telecom operators has shifted to cost cutting. The telecom operators are now strongly contemplating sharing telecom infrastructure to save time and cost. Internationally, although passive infrastructure sharing has been successful in the US, it has not yet been proven in Asia.

Current High Demand for Telecom Sites may plateau

Our rollout plan is driven by the projected growth in the Indian cellular subscriber base. The overall tele-density from current level of 26% with a subscriber base of 301 million, as at March 2008, is expected to reach to 500 million subscribers in 2010, a CAGR of 41%. However, over a period of five years, we may face the risk of the Indian wireless market not growing at the projected growth rate as stated above, resulting in stagnant/slowdown of tower demand.

Decrease in demand for telecom sites will affect our operating results

Many of the factors affecting the demand for telecom sites could materially affect our operating results. These factors include:

The demand for telecom sites is dependent on the needs of wireless service providers. In the event that there is a significant variation in any of the aforesaid factors, our business, our growth plans and results of operations may be significantly affected.

If our wireless service provider customers consolidate or merge with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be adversely affected.

Significant consolidation among our wireless service provider customers may result in reduced capital expenditures in the aggregate because the existing networks of many wireless carriers overlap, as do their expansion plans. The Indian wireless telecom market has experienced consolidation during the past couple of years. There are still numerous wireless operators in India with at least 2-3 GSM operators and 1-2 CDMA operators for each circle. There is potential for further consolidation among the operators to realize a larger operating scale and subscriber base. Consolidation among wireless carriers would also increase our risk that the loss of one or more of our major customers could materially decrease revenues and cash flows.

We may not get sufficient number of sites for fresh roll out. We also face risk of selecting site location, constructing & acquiring sites, as well as managing the new portfolio.

We, through our management and promoter company GTL Ltd., possess experience in telecom infrastructure engineering, tower management, and network consultancy including identification of carrier's needs according to its capital expenditure, marketing strategy, network planning, design, drive test and network optimisation, site engineering & documentation, site construction, OEM's equipment installation, testing, commissioning and integration, customer acceptance and training and market expertise from its current coverage in tower portfolio and services. However, we still face risks in selecting the right site location, in constructing and acquiring sites, in managing the new portfolio and in getting sufficient number of sites for fresh roll outs.