Trade Analytics
Telecommunication
According to a study by GSMA, India is all set to become the fourth largest smartphone market by 2020.

Telecom Industry in India

Latest update: April, 2018

  • India is currently the 2nd largest telecommunication market and has the 3rd highest number of internet users in the world
  • India’s telephone subscriber base expanded at a CAGR of 19.16 per cent, reaching 1188.5 million during FY07–1
  • Tele-density (defined as the number of telephone connections for every 100 individuals) in India, increased from 17.9 in FY07 to 92.59 in FY171

 

Notes: CAGR - Compound Annual Growth Rate, 1- Data till February 2017
Source: Telecom Regulatory Authority of India

Growth
  • The mobile segment’s teledensity surged from 14.6 per cent in FY07 to 90.70 per cent in FY171
  • GSM services continue to dominate the wireless market with a 98.66 per cent share (as of December 2016); while CDMA services accounted for the remaining 1.34 per cent share.

 

Note:Teledensity - The number of telephone lines for every 100 people in a country, GSM - Global System for Mobile Communications, CDMA - Code Division Multiple Access, 1 - Data till February 2017
Source: Telecom Regulatory Authority of India

Growth

 

Last Updated: April, 2018

SECTORAL REPORT | April, 2018

Introduction

India is currently the world’s second-largest telecommunications market with a subscriber base of 1.19 billion and has registered strong growth in the past decade and half. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP), according to report prepared by GSM Association (GSMA) in collaboration with the Boston Consulting Group (BCG). The country is the fourth largest app economy in the world.

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

The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years according to estimates by Randstad India. The employment opportunities are expected to be created due to combination of government’s efforts to increase penetration in rural areas and the rapid increase in smartphone sales and rising internet usage.

Market Size

The mobile industry is expected to create a total economic value of Rs 14 trillion (US$ 217.37 billion) by the year 2020. It would generate around 3 million direct job opportunities and 2 million indirect jobs during this period@. India’s smartphone market grew 14 per cent year-on-year to a total of 124 million shipments in 2017.%

Rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India over the next five years, creating opportunities for new businesses. The monthly data usage per smartphone in India is expected to increase from 3.9 GB in 2017 to 18 GB by 2023.

Data usage on Indian telecom operators' networks (excluding Reliance Jio), doubled in six months to 359 petabytes or 3.7 million gigabytes per month as 4G data usage share increased to 34 per cent by the end of June 2017$. According to a report by leading research firm Market Research Store, the Indian telecommunication services market will likely grow by 10.3 per cent year-on-year to reach US$ 103.9 billion by 2020.

Investment/Major development

With daily increasing subscriber base, there have been a lot of investments and developments in the sector. The industry has attracted FDI worth US$ 30.08 billion during the period April 2000 to December 2017, according to the data released by Department of Industrial Policy and Promotion (DIPP).

Some of the developments in the recent past are:

  • Finnish telecommunication company Nokia, is going to collaborate with Indian telecom companies Bharti Airtel and BSNL to work on the roadmap for 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 a new affordable tariff structure with the principle of more you use, 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 expansion of network and operations, stated Mr Akhil Gupta, Vice Chairman, Bharti Enterprise.

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 other major initiatives taken by the government are as follows:

  • The Government of India is soon going to come out with a new National Telecom Policy 2018 in lieu of rapid technological advancement in the sector over the past few years.
  • The Government of India is working to digitally connect the rural and remote regions in the country and has decided a new affordable tariff structure with the principle of more you use, 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 utilisation with states'.

Road Ahead

India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report. Internet economy expected to touch Rs 10 trillion (US$ 155 billion) by 2018, contributing around 5 per cent to the country’s GDP. With the government’s favourable regulation policies and 4G services hitting the market, the Indian telecommunication 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 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 production of battery chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025##.

Exchange Rate Used: INR 1 = US$ 0.016 as of March 1, 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

Notes: # - GSMA report ‘GSMA Intelligence Consumer Survey 2016’, * - according to a report by CMR, @ - according to a report ‘The Mobile Economy India 2016’ by GSMA, $- Nokia Mbit report ‘Mobile Broadband India Traffic’, $# - Gartner research, ## - as per the Indian Cellular Association, @@ - according to a report by Canal, % - As per IDC

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

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