2016 India - Telecoms, Mobile, Broadband and Digital Media - Statistics and Analyses

India’s Mobile Market Continues to Boom

Telecoms Infrastructure

Despite setbacks, India continues to be one of the fastest growing major telecom markets in the world. It is also one of the largest. Sweeping reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. By 2016 there were positive signs of a healthier regulatory environment taking shape. The government has been continuing to push to complete the restructuring of the telecommunications regulatory regime.

India’s mobile market continues to get the bulk of local capital expenditure as the operators expand their infrastructure. The mobile market continues to be the main focus of the Indian telecom sector. India has a huge national telecommunications network. The fixed line market in India remains highly underdeveloped due to the dominance of the mobile segment. Further, the number of fixed telephone lines is slowly declining as the mobile segment continues to expand. Overall penetration dropped from 2.1% in 2014 to 2.0% in 2015 and 1.9% in 2016.

With fixed-line penetration falling below 3%, the country has nevertheless achieved a remarkable coverage, 99% of the population having some form of access to a telephone. There has been heavy investment in telecoms infrastructure over the last decade to service the huge population. The government and the operators push forward on a number of fronts to speed up the roll-out of services to the wider population. Market leader BSNL’s market share has dropped significantly over the past six years due to growing market competition and the entry of new players in the market such as Vodafone.

In 2016 Vodafone signed an agreement to acquire cable broadband provider YOU Broadband for INR4 billion (USD59.9 million). The acquisition is part of Vodafone’s strategy of increasing its presence in the fixed broadband market. The takeover is expected to strengthen its mobile data services.

There has been a fresh effort to promote broadband throughout the country; after a period in which broadband development languished, and there is now hope for a serious expansion phase in this segment of the market. Mobile broadband has also impacted the market and by 2016 was already dramatically changing the internet sector.

Mobile Market

Over the past decade India’s mobile sector has developed a sustained momentum, aided by higher subscriber volumes, lower tariffs and falling handset prices. There had been a major push to take mobile services into the poorer and rural areas of the country, a move that inevitably weighed down on ARPU.

India’s mobile market dominates the local telecom sector with its large subscriber base and revenue numbers, as well as the huge capital investment by operators. It has continued to be a highly competitive market in which a number of major players together with a larger number of smaller players have been battling to increase market share.

Kazakhstan’s mobile market has experienced very strong growth over the last five years. Mobile penetration has risen from 72% in 2011 to 81% in 2016. The market remains highly competitive, but rather than a focus only on growth in subscribers the market is shifting to value-added. The roll-out of 4G / LTE services is driving significant shift to mobile data services across the country. Much will depend on the continuing resilience of the economy in India, with any drop in economic performance quickly triggering a drop in demand for mobile services. Further strong growth predicted over the next five years to 2021. By that year the market will reach mobile penetration of over 90%.

Significant market consolidation amongst the mobile operators was underway in 2016. The three-way merger of SSTL, RCOM and Aircel will establish a company with around 200 million customers, making it the second largest mobile operator by subscribers after Bharti Airtel, and just ahead of Vodafone.

Mobile broadband penetration has grown strongly in India over the past few years driven by a strong and growing mobile subscriber base. Further strong growth is predicted over the next year to 2017. Mobile broadband is set to grow exponentially throughout India, driving digital inclusion and economic growth for India’s consumers and businesses.

Despite its huge growth and its potential for further growth, the Indian telecoms market continued to present a number of challenges for mobile operators.

They have struggled to maintain Average Revenue per User (ARPU) levels. The country could boast some of the lowest mobile tariffs in the world, but at the time it also had one of the highest mobile usage levels in the world.

Fixed Broadband and Digital Economy

Despite a booming internet market across the country, India’s move into high-speed broadband internet access has been distinctly sluggish. When it came to high-speed broadband access, for long time there was a reluctance to adopt what was on offer, especially within the corporate sector, and the growth of broadband remained relatively slow for some time.

India’s fixed broadband market remains underdeveloped in India, mainly due to the dominance of the mobile platform and an unwillingness by operators to invest in fixed broadband infrastructure. Between 2011 and 2015, fixed broadband penetration increased only marginall. During 2015/16 the market grew by nearly 10% reaching. Moderate growth is predicted for the next five years to 2021.

In November 2015 Bharti Airtel allocated an investment of INR600 billion (USD9 billion) for the upgrade of its pan-Indian network over the next three years under ‘Project Leap’. In March 2016 Vodafone signed an agreement to acquire cable broadband provider YOU Broadband.

In December 2015 India’s telecom minister confirmed that the government has no plans to disinvest MTNL and BSNL.

By 2016 BSNL expected to shut down its WiMAX network in areas with small subscriber bases or where equipment has broken down. In June 2016 BSNL launched Wi-Fi Mobile Data Offloading Services (MDO) across the entire south

By 2016 India was making good progress on the government-mandated digitisation program. There are already rapidly expanding digital segments in the TV market, notably IPTV/Broadband TV and with some digitalisation of the traditional platforms proceeding at a good pace. The type of expansion being witnessed in digital media is expected to continue at an increased rate.

Key developments:

• a national optical fibre network (NOFN) project has been launched;
• the total number of ‘connected villages’ in India has passed 99%;
• the Indian government spun out the Department of Electronics and Information Technology (DeitY) from the Ministry of Communications
• India’s Telecom Commission approved the introduction of a new category of unified licence, virtual network operators (VNOs).
• The TRAI published new regulations on net neutrality, prohibiting operators from providing discriminatory tariffs based on content.
• Vodafone signed an agreement to acquire cable broadband provider YOU Broadband for INR4 billion (USD59.9 million).
• Idea launched its first 4G platform
• released plans for a limited LTE launch in that month, with a commercial launch expected to follow
• Telenor India is aiming to roll out 4G services to its six active circles by the end of March 2017.
• Vodafone continued to rollout 4G services.
• Airtel completed the purchase of Augere Wireless Broadband,
• Bharti Airtel allocated investment for the upgrade of its pan-Indian network over the next three years under ‘Project Leap’.
• India’s Ministry of Defence (MoD) agreed to return spectrum in the 1800MHz and 2100MHz bands.
• Bharti Airtel signed an agreement with Aircel to acquire its 4G-compatible spectrum in eight circles.
• The Department of Telecommunications (DoT) made an amendment to the Unified Licence to allow sharing of active infrastructure.
• transitioning the mass market to digital continues to present a major challenge for India;
• Bharti Airtel allocated an investment of INR600 billion for the upgrade of its pan-Indian network over the next three years under ‘Project Leap’
• Vodafone signed an agreement to acquire cable broadband provider YOU Broadband.
• India’s telecom minister confirmed that the government has no plans to disinvest MTNL and BSNL.

Companies mentioned in this report:

Aircel/Dishnet, Bharti Airtel, Loop Mobile (BPL Mobile), Idea, Reliance Communications, Tata Teleservices, Vodafone Essar, Uninor (Unitech), Videocon, S Tel, Bharti Telenet, Reliance Infocomm, Tata Teleservices, Sistema (Shyam Telelink), Swan Telecom, Videsh Sanchar Nigam Ltd (VSNL), Bharat Sanchar Nigam Ltd (BSNL), Mahanagar Telephone Nigam Ltd (MTNL), Videocon.