Advantage India
Robust
Demand
* In India, the total telephone subscriber base stood at 1,190.33 million in December 2023. Tele-density of rural subscribers reached 58.56% in December 2023.
* Total volume of wireless data usage increased by more than 10 folds from 4,206 petabytes in Q1, FY18 to 47,629 petabytes in Q2, FY24.
* Also, India is one of the biggest consumer of data worldwide. As per TRAI, average wireless data usage per wireless data subscriber was 19.08 GB per month in September 2023 from 61.66 MB in March 2014.
Attractive
Opportunities
* India's 5G subscriptions to have 350 million by 2026. accounting for 27% of all mobile subscriptions.
* The value of export of cell phones in FY23 at Rs. 90,000 crore (US$ 10.84 billion). Moreover, during April-June 2023, electronic goods exports were estimated at US$ 6.89 billion.
* By 2025, India will need ~22 million skilled workers in 5G-centric technologies such as Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing.
* India ranks 2nd in "international mobile broadband internet traffic" and "international Internet bandwidth."
Policy
support
* The Union Cabinet approved Rs. 12,195 crore (US$ 1.65 billion) production-linked incentive (PLI) scheme for telecom & networking products under the Department of Telecom. On December 2022, 42 companies have committed an investment Rs. 4,115 crore (US$ 502.95 million) comprising 28 MSMEs and 14 Non-MSMEs (eight domestic and seven global companies) approved under the PLI Scheme. To drive the development of 6G technology, the Department of Telecommunications (DoT) has developed a sixth-generation (6G) innovation group.
Increasing
Investments
* In Union Budget 2023-24 the Department of Telecommunications was allocated Rs. 97,579.05 crore (US$ 11.92 billion). Of this, Rs. 400 crore (US$ 48.88 million) is for Research and Development, Rs. 5,000 crore (US$ 611.1 million) is for Bharatnet.
* FDI inflow in the telecom sector stood at US$ 39.31 billion between April 2000-December 2023.
* The PLI plan for Large Scale Electronics Manufacturing received about Rs. 4,700 crore (US$ 569.49 million) in investment as of September 2022.
Introduction
Currently, India is the world’s second-largest telecommunications market with a total telephone subscriber base of 1,190.33 million in December 2023 and has registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute 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, which has ensured the availability of telecom services to consumers at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms has made the sector one of the fastest growing and the top five employment opportunity generator in the country.
Market Size
India is the world’s second-largest telecommunications market. The total subscriber base, wireless subscriptions as well as wired broadband subscriptions have grown consistently. In India, the total telephone subscriber base stood at 1,190.33 million in December 2023.
As of December 2023, the wireless subscribers base stood at 1,158.49 million. As of December 2023, the wireless subscriber base of Jio stood at 459.81 million, followed by Bharti Airtel (257.37 million), Vodafone Idea 127.28 million, and BSNL (21.28 million).
Total broadband subscriptions in the country grew from 149.75 million in FY16 to 904.54 million in FY23 (April-December). The number of wired broadband subscriptions stood at 38.35 million in FY24 (April-December). Wireless broadband subscribers stood at 866.19 million in FY24 (April-December). As of December 2023, the top five service providers were as follows: Reliance Jio Infocom Ltd stood at 470.19 million, followed by Bharti Airtel (264.76 million), Vodafone Idea 127.29 million, and BSNL (25.12 million).
The aggregated data consumed as of September 2023, was 73,23,038 GB. The total wireless data usage in India grew at a rate of 5.9% from 44,967 PB in June 2023 to 47,629 PB in September 2023. Out of total data wireless usage, 2G data usage was 46 PB, 3G data usage was 353 PB, 4G data usage was 42,505 and 5G data usage was 2,063 PB during the (April 2023- June 2023) quarter. The contribution of 2G, 3G, 4G and 5G data usage to the total volume of wireless data usage was at 0.10%, 0.78%, 94.53% and 4.59%.
Gross revenue of the telecom sector stood at Rs. 82,741 crore (US$ 9.99 billion) in the second quarter of FY24.
Over the next five years, rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India, creating opportunities for new businesses.
By 2025, India will need ~22 million skilled workers in 5G-centric technologies such as Internet of Things (IoT), Artificial Intelligence (AI), robotics and cloud computing.
Investment/Major Development
With daily increasing subscriber base, there have been a lot of investment and development in the sector. FDI inflow in the telecom sector stood at US$ 39.31 billion between April 2000-December 2023.
Some of the developments in the recent past are:
- To make India 5G-ready, there is a push for fiberisation of telecom towers. Currently, 36% of towers are fiberised, and plans involve deploying 12 lakh towers.
- As of March 2023, Jio partners with EESL to provide one million smart prepaid meters in Bihar.
- In May 2023, STT GDC invested Rs. 2,000 crore (US$ 242.33 million) in two more data centres in Pune.
- As of March 2023, the wireless subscriber base of Jio stood at 430.23 million, followed by Bharti Airtel (235.78 million), Vodafone Idea 124.82 million, BSNL 21.77 million and Intech Online Pvt. Ltd. 0.23 million.
- Total broadband subscriptions in the country grew from 149.75 million in FY16 to 846.57 million in FY23 (April-March). The number of wired broadband subscriptions stood at 33.49 million in FY23 (Until March 2023). Wireless broadband subscribers stood at 813.08 million in FY23. As of June 2023, the top five service providers were as follows: Reliance Jio Infocom Ltd stood at 438.58 million, followed by Bharti Airtel (241.52 million), Vodafone Idea (124.89 million), and BSNL (20.93 million).
- As per TRAI, average wireless data usage per wireless data subscriber was 17.11 GB per month in December 2022 from 61.66 MB in March 2014.
- The aggregated data consumed as on 31st December 2022 was 14,024,519 GB. The total wireless data usage in India grew at a rate of 0.96% from 40,126 PB in September 2022 to 40,512 PB in December 2022. The contribution of 2G, 3G and 4G data usage to the total volume of wireless data usage was at 0.14%, 0.93% and 98.93%.
- In September 2022, Vodafone Idea partnered with Indian Council for Research on International Economic Relations (ICRIER) called InViCT to set up a telecom Centre of Excellence.
- In Q1 FY22, Indian technology, media, and telecom (TMT) sector lead the M&A market in India bagging deals worth US$ 11.5 billion.
- In February 2022, Bharti Airtel acquired 10% strategic stake in a Singapore-based start-up, Aqilliz.
- In January 2022, Google made a US$ 1 billion investment in Airtel through the India Digitization Fund.
- In October 2021, Vodafone Idea stated that it is in advanced talks to sell a minority stake to global private equity investors including Apollo Global Management and Carlyle to raise up to Rs. 7,540 crore (US$ 1 billion) over the next 2-3 months.
- In October 2021, British satellite operator Inmarsat Holdings Ltd. announced that it is the first foreign operator to get India’s approval to sell high-speed broadband to planes and shipping vessels. Inmarsat will access the market via Bharat Sanchar Nigam Ltd. (BSNL) after BSNL received a license from the Department of Telecommunications.
- In October 2021, Dixon Technologies announced plans to invest Rs. 200 crore (US$ 26.69 million) under the telecom PLI scheme; this investment included the acquisition cost of Bharti Group’s manufacturing unit.
- In September 2021, Bharti Airtel announced an investment of Rs. 50 billion (US$ 673 million) in expanding its data centre business to meet the customer demand in and around India.
- In August 2021, Tata Group company Nelco announced that the company is in talks with Canadian firm Telesat to sign a commercial pact for launching fast satellite broadband services in India under the latter’s Lightspeed brand, a move which will pit the combined entity against Bharti Enterprises-backed OneWeb, Elon Musk’s SpaceX and Amazon.
- In March 2021, Vodafone Idea Ltd. (VIL) announced that the acquired spectrum in five circles would help improve 4G coverage and bandwidth, allowing it to offer ‘superior digital experience’ to customers.
- In March 2021, Advanced Television Systems Committee (ATSC) and Telecommunications Standards Development Society, India (TSDSI) signed a deal to boost adoption of ATSC standards in India in order to make broadcast services available on mobile devices. This allows the TSDSI to follow ATSC standards, fostering global digital broadcasting standard harmonisation.
- In the first quarter of FY21, customer spending on telecom services increased 16.6% y-o-y, with over three-fourths spent on data services. This spike in consumer spending came despite of the COVID-19 disruption and lack of access of offline recharges for a few weeks.
- India had over 500 million active internet users (accessed Internet in the last one month) as of May 2020.
Government Initiatives
The Government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the key initiatives taken by the Government are as follows:
On November 15th, Prime Minister, Mr. Narendra Modi launched the Nyaya Maha Abhiyan, a three-year mission with a Rs. 24,000 crore (US$ 2.9 billion) project outlay. Over the past three months, projects exceeding Rs. 7000 crore (US$ 845.9 million) have been sanctioned, primarily focusing on housing, water, road, electricity, telecom, and Multipurpose Centres.
- The Telecom Regulatory Authority of India (TRAI) has issued a Telecom Tariff (69th amendment) order 2022 on “Tariff for SMS and Cell Broadcast alerts disseminated through Common Alerting Protocol (CAP) platform during disasters/non-disasters”. Department of Telecom (DoT) has requested TRAI to provide tariff for SMS and Cell Broadcast alerts/messages to be disseminated by TSPs through CAP platform during disasters/non-disasters.
- The Government of India intends to establish one hundred labs for creating applications using 5G services in engineering universities as part of the Union Budget 2023, in order to realize a new range of possibilities, business models, and job potential.
- As of March 2023, the PLI scheme for Large-Scale Electronics Manufacturing (LSEM) attracted investment of Rs. 5,998 crore (US$ 726.77 million) and led to a total production of Rs. 2,76,903 crore (US$ 33.55 billion), including exports of Rs. 1,28,886 crore (US$ 15.61 billion).
- In Union Budget 2023-24, the Department of Telecommunications was allocated Rs. 97,579.05 crore (US$ 11.92 billion). Of this, Rs. 400 crore (US$ 48.88 million) is for Research and Development, Rs. 5,000 crore (US$ 611.1 million) is for BharatNet.
- RailTel, a mini-Ratna PSU launched Prime Minister Wi-Fi Access Network Interface (PM-WANI) to access its Public Wi-Fi services across 100 railway stations having 2,384 Wi-Fi hotspots in 22 states.
- Universal Service Obligation Fund (USOF) officially launched Telecom Technology Development Fund (TTDF) Scheme on October 01st, 2022.
- The government plans to update extant regulatory framework with the Indian Telecommunication Bill, 2022
- Up to July 2022, 5,84,747 km length of Open Fiber Control (OFC) is laid connecting 1, 87,245 Gram Panchayats. In 1,81,888 Gram Panchayats the service is ready on fibre and satellite.
- Prime Minister Mr. Narendra Modi launched 5G services on October 1, 2022
- On December 2022, 42 companies have committed an investment Rs. 4,115 crore (US$ 502.95 million) comprising 28 MSMEs and 14 non-MSMEs (eight domestic and seven global companies) have been approved under the Production-linked Incentive (PLI) Scheme
- Dedicated government schemes BharatNet Project Scheme, Telecom Development Plan, Aspirational District Scheme, initiatives in North-Eastern Region through Comprehensive Telecom Development Plan (CTDP), etc. resulted in a 200% increase in rural internet subscriptions between 2015 to 2021.
- To drive the development of 6G technology, the Department of Telecommunications (DoT) has developed a sixth generation (6G) innovation group.
- In October 2021, Telecom Secretary Mr. K. Rajaraman inaugurated the Quantum Communication Lab at the Centre for Development of Telematics (C-DOT), Delhi, and unveiled the indigenously developed Quantum Key Distribution (QKD) solution by C-DOT. QKD can support a distance of >100 kms on standard optical fibre.
- In August 2021, the Department of Telecommunications (DoT) initiated discussions with banks to address financial stress in the telecom sector, particularly Vodafone Idea Ltd. (VIL) that urgently requires fund infusion to stay afloat.
- FDI cap in the telecom sector has been increased to 100% from 74%; out of 100%. In October 2021, the government notified 100% foreign direct investment (FDI) via the automatic route from previous 49% in the telecommunications sector. FDI of up to 100% is permitted for infrastructure providers offering dark fibre, electronic mail, and voice mail.
- Following are the achievements of the Government in the past four years:
- Department of Telecommunication launched ‘Tarang Sanchar’ - a web portal sharing information on mobile towers and EMF Emission Compliances.
- Payments on unified payments interface (UPI) hit an all-time high of 3.65 billion (by volume), with transactions worth ~Rs. 6.54 trillion (US$ 87.11 billion) in September 2021. As of July 2023, 473 banks were live on unified payment interface (UPI).
- Over 75% increase in internet coverage—from 251 million users to 446 million.
Road Ahead
Revenue from the telecom equipment sector was expected to grow to US$ 26.38 billion by 2020. The number of internet subscribers in the country expected to double by 2021 to 829 million and overall IP traffic expected to grow four-fold at a CAGR of 30% by 2021.
According to a Zenith Media survey, India is expected to become the fastest-growing telecom advertisement market, with an annual growth rate of 11% between 2020 and 2023.
The Indian Government is planning to develop 100 smart city projects, and IoT will play a vital role in developing these cities. The National Digital Communications Policy 2018 envisaged attracting investment worth US$ 100 billion in the telecommunications sector by 2022. App downloads in the country increased from 12.07 billion in 2017 to 19.00 billion in 2019. Indians downloaded over 28 billion apps on their mobiles in 2022 and accounted for 5% of the 625 billion downloads globally. A major force behind meeting the telecom industry's present and future technological needs is the Atmanirbhar Bharat programme. There had been UPI a push towards developing indigenous 5G technology to help India move towards 5G rapidly. India is also planning for 6G in advance and started investing in the development of 6G technology already.
Note: Conversion rate used in March 2024, Rs. 1 = US$ 0.012
References: Media Reports and Press Releases, Cellular Operators Authority of India (COAI), Telecom Regulatory Authority of India (TRAI), Department of Telecommunication (DoT), Department for Promotion of Industry and Internal Trade (DPIIT), India Services Sector Report by Deloitte, Union Budget 2023-24
Note: IP - Internet Protocol, PB – Petabytes
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