Telecom Industry in India

• India is currently the 2nd largest telecommunication market and has the 3rd highest number of internet users in the world.
• India is one of the largest data consumers globally. It has the highest data usage per smartphone at an average of 9.8 GB per month.
• With 70% of the population staying in rural areas and with rural subscribers forming 43.69 % of the total telephone subscribers of January 2020, India’s rural market will be key to growth in the coming years.
• The Government of India unreeled the National Digital Communications Policy, 2018 in September 2018. The policy aimed to attract US $ 100 billion worth of investment and generate 4 million jobs in the sector by 2022.
• The government of India launched the National Broadband Mission with an aim to provide Broadband access to all villages by 2022.
• India’s telephone subscriber base expanded at a CAGR of 19.16 percent, reaching 1188.5 million during FY07–1.

Introduction

India is currently the world’s second-largest telecommunications market with a subscriber base of 1.20 billion and has registered strong growth in the last decade and a half. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP) according to a report prepared by GSM Association (GSMA) in collaboration with Boston Consulting Group (BCG). In 2019, India surpassed the US to become the second-largest market in terms of the number of app downloads.

The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth of the Indian telecom sector. The Government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured the availability of telecom services to consumers at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms have made the sector one of the fastest-growing and the top five employment opportunity generator in the country.

What is the market size of the Telecom Industry in India?

• India ranks as the world’s second-largest market in terms of total internet users. The number of internet subscribers in the country increased at a CAGR of 45.74 percent during FY06-FY19 to reach 636.73 million in FY19. The internet subscribers reached 687.62 million by September 2019. Total wireless data usage in India grew 10.58 percent y-o-y to 19,838,886 terabytes between July-September 2019.
• India is also the world’s second-largest telecommunications market. Its total telephone subscriber base and teledensity reached 1,177.02 million and 87.45 percent, respectively, as of January 2020.
• The gross revenue of the telecom sector stood at Rs 121,527 crore (US$ 17.39 billion) in FY20 (April-September 2019).
• Over the next five years, a rise in mobile-phone penetration and a decline in data costs will add 500 million new internet users in India, creating opportunities for new businesses.

What are the recent Investments/ Development in the Telecom Industry in India?

• Finnish telecommunication company Nokia is going to collaborate with Indian telecom sector companies Bharti Airtel and BSNL to work on the roadmap for the development of 5G technology and creating a conducive ecosystem for 5G in India.
• The Government of India is working to digitally connect the rural and remote regions in the country and has decided on a new affordable tariff structure with the principle of the more you use, the less you pay. The changes will soon be reflected in tariff changes by service providers in the country.
• India telecommunication companies will be investing US$ 20 billion over the next two years for the expansion of network and operations, stated Mr. Akhil Gupta, Vice Chairman, Bharti Enterprise.

What are Government Initiatives taken for the development of the Telecom Industry in India?

The government has fast-tracked reforms in the telecom industry and continues to be proactive in providing room for growth for telecom sector companies. Some of the other major initiatives taken by the government are as follows:

• The Government of India is working to digitally connect the rural and remote regions in the country and has decided on a new affordable tariff structure with the principle of the more you use, the less you pay. The changes will soon be reflected in tariff changes by service providers in the country.
• The Government of Telangana is targeting to provide broadband connection to every household in the state by 2018, which is expected to lead to revolutionary changes in the education and health sectors.
• Mr. Manoj Sinha, Union Minister of Communications, Government of India, stated that the government will provide the required support for achieving the dream of a fully connected and truly empowered India soon while inaugurating a national conference on ‘BharatNet and its utilization with states’.

Road Ahead

India will emerge as a leading player in the virtual world by having 700 million internet users out of the 4.7 billion global users by 2025, as per a Microsoft report. The Internet economy is expected to touch Rs 10 trillion (US$ 155 billion) by 2018, contributing around 5 percent to the country’s GDP. With the government’s favorable regulation policies and 4G services hitting the market, the Indian Telecom Sector is expected to witness fast growth in the next few years. The Government of India also plans to auction the 5G spectrum in bands like 3,300 MHz and 3,400 MHz to promote initiatives like the Internet of Things (IoT), machine-to-machine communications, instant high-definition video transfer as well as its Smart Cities initiative. The Indian mobile phone industry expects that the Government of India’s boost to the production of battery chargers will result in the setting up of 365 factories, thereby generating 800,000 jobs by 2025as per the Indian Cellular Association, according to a report by Canaly.

Exchange Rate Used: INR 1 = US$ 0.015 as of January 4, 2018. 

REFERENCES: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department of Industrial Policy and Promotion (DIPP), India Services Sector Report by Deloitte.

Disclaimer: This information has been collected through a secondary source and ASC is not responsible for any errors in the same.