Mobile data usage witnessed unprecedented growth in 2017. Indian consumers have consumed more data than ever, putting the country amongst the leading data-consuming nations across the globe, surpassing many developed economies. The surge in data usage is being driven by falling data prices (4G data tariffs declining from Rs 250 per GB to less than Rs 50 per GB), simplification of tariff plans (unlimited voice calls and low-cost data services) and increased availability of affordable 4G-enabled handsets (approximately priced at Rs 1,500).
Average data usage increased from 153.8 MB per month in June 2016, to 1.2 GB per month in June 2017. Despite this phenomenal growth, the sector continues to face financial woes. ARPU declined to Rs 89.3 at the end of June 2017, as compared to Rs 140.8 a year ago. The AGR for the quarter ended June 2017 declined by 25% y-o-y. In tandem, the fall in operators’ revenue and pressure on profitability has accelerated sector consolidation in 2017. A number of M&A deals have been announced that is altering the telecoms sector landscape in India.
India set to thrive on digital innovation, capitalising on data growth India is at the cusp of a digital revolution. India’s total mobile data traffic per month is expected to increase 11x to exceed 14 exabyte (EB) in 2023. Further, the digital content ecosystem in India is growing significantly, whetting consumer appetite for higher-bandwidth consumption led by mobile video. As per industry estimates, India is expected to reach 84 billion internet video minutes per month by 2021, which is 160,000 years of video per month, or about 32,000 video minutes every second.
Adjacent market opportunities open up new business models, ones that are centred on digital service provisioning. As India transitions in to a digital economy, data is expected to drive revenue and investments. Internet of Things (IoT) and 5G is set to transform the country by supporting cutting edge technologies such as artificial intelligence and robotics. For instance, the government of India’s Centre of Excellence for IoT is likely to accelerate the M2M ecosystem by capitalising on the ICT strengths of the country. A thriving IoT start-up culture would boost innovation and help to overcome some of the key sector challenges.
Although India’s wireless tele-density stands at approximately 91%, the number of unique subscribers is much lesser, owing to multi-device ownership and dual-SIM phenomenon. According to the GSMA, the total unique subscribers are forecasted to reach 955 million by 2020, as compared to 646 million in 2016. This offers considerable revenue growth opportunity for operators from connecting the unconnected. With mobile broadband connections accounting for approximately 50% of total connections by 2020, India is expected to be at the forefront of the data consumption economy. Moreover, increasing digitisation would usher in innovative products and services across the sector value-chain
and open up new opportunities for TMT companies.
Key policy measures & operator initiatives will act as supporting pillars of the data economy
The National Telecom Policy (NTP), which is expected to be announced in 2018, has the chance to address and overcome a number of legacy issues ailing the sector. It should aim to future-proof the policy and regulatory landscape to capitalise on disruptive technologies such as IoT and 5G.
Long-term sustainability of the sector hinges on profitable growth of all stakeholders in the sector. The ongoing consolidation is set to improve the financial health of the sector through significant cost synergies, improving the overall investment climate.
Fibre-isation of mobile towers would cater to increased data bandwidth requirements in the country. With the advent of newer technologies, such as 5G, availability of strong back-haul is essential. To boost fibre-isation, creation of netcos or network companies can be a viable alternative. Newer avenues to lower cost of service provisioning should be explored. The efficiency of operations would significantly increase through non-discriminatory access to shared active and passive network resources. In future, there is no choice but to share common infrastructure such as ducts, to optimize capex and lower costs.
Operators themselves have to undergo significant digital transformation to capitalize on the data growth opportunity. Virtualisation is expected to play a crucial role in the evolution of network technologies. Both Network Function Virtualization (NFV) and Software Defined network (SDN) would help to make the network infrastructure more dynamic and agile. It would enable operators to deploy 5G, take advantage of new digital business models and help share network resources.
Right of Way (RoW) clearances have long been an issue of contention for the telecoms sector. Even after the new Indian Telegraph Right of Way Rules were published in November 2016, the situation is not very conducive. The onus of implementation of the new rules lies with the respective state governments and local bodies. Moreover, some of the state governments have their own RoW guidelines, which may be at variance with the new rules. Urgent coordination among various stakeholders is required to facilitate telecoms infrastructure rollout in the country.
A $1t digital economy may not be a pipe dream after all
The pace of digital innovation in the sector is likely to touch each and every Indian. India is digitising the most and is one of the fastest adopters of new technologies (e.g. mobile financial services, social media). The government of India’s vision to make India a $1-trillion digital economy in the next 5-6 years largely hinges on ICT acting as a key enabler of accelerated growth across sectors.