The number of mobile broadband users in India reached 839 million

India now has 839 million mobile broadband (MBB) users, up from a modest 7.2% in the previous year. However, the rate of additions accelerated in August due to increased use of Reliance Jio's affordable internet-enabled 4G phone.

The scenario highlights the challenges which the telcos face in persuading featurephone users to switch to more expensive plans with higher profit margins. However, thanks to steady rates and declining 4G handset pricing, industry leaders and analysts are hopeful that the growth in 4G subscriptions will continue during the festive season and the rest of the fiscal year.

In the 12 months through August, the number of non-MBB or "2G" users in India fell by around 16% to 309 million, according to telecom subscriber data released by the Telecom Regulatory Authority of India (TRAI).

In light of the 12% drop in 4G smartphone pricing in recent months, executives and analysts stated that the growth in 4G user numbers will be fuelled by 2G conversions.

The changes are essential to the telcos' drive to increase average revenue per user (ARPU), as headline tariffs are unlikely to increase anytime soon. However, analysts caution that Jio's plan to bring all 2G users up to 4G may still be some ways off given the poor pace of upgrades.

Trai reports that the industry added a record 7.6 million 4G customers in August 2023, significantly more than the 4.6 million 4G users who were added per month on average during the previous year.

In light of the 12% drop in 4G smartphone pricing in recent months, executives and analysts stated that the growth in 4G user numbers will be fuelled by 2G conversions.

The changes are essential to the telcos' drive to increase average revenue per user (ARPU), as headline tariffs are unlikely to increase anytime soon. However, analysts caution that Jio's plan to bring all 2G users up to 4G may still be some ways off given the poor pace of upgrades.

TRAI reported that the sector added a record 7.6 million 4G users in August 2023, significantly more than the 4.6 million 4G users who were added per month on average during the previous year.

Following the July introduction of the Jio Bharat device, Jio added the most 4G users (3.2 million) in August, ahead of Vodafone Idea (1.3 million) and Airtel (2.6 million).

Mr. Nitin Soni, Senior Director of Corporates at Fitch Ratings anticipated that the recent spike in 4G user additions will continue. He said that while headline tariff hikes are unlikely to occur anytime soon, Bharti Airtel and Reliance Jio will be motivated to give priority to quick 2G to 4G conversions in both urban and rural regions in order to increase data consumption and ARPU.

According to research firm IDC, the average selling price (ASP) of 4G smartphones decreased by about 12% from US$ 123 in the March quarter of CY23 to US$ 109 in the September quarter.

Handset market trackers at CMR report that in the September quarter, shipments of 4G feature phones increased by an astounding 300% year over year. Jio Bharat-Version 1, Karbonn, and Jio Bharat-Version 2 led the way, taking up a combined 63% of the market. On the other hand, within the same time frame, 2G feature phone shipments fell 27% year over year.

Despite gaining 11.2 million, 7.7 million, and 1.8 million 4G subscribers in the fiscal third quarter, respectively, Jio, Airtel, and Vi reported sequential ARPU increases of 0.66%, 1.5%, and 2.1% during the quarter.

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