India’s Mobile Market Continues to Boom
Despite setbacks, India continues to be one of the fastest growing major telecoms markets in the world. It is also one of the largest. Sweeping reforms introduced by successive governments over the last decade have dramatically changed the nature of telecommunications in the country, and by 2016 there were 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 receive the bulk of local capital expenditure as operators expand their infrastructure. The mobile market continues to be the main focus of the country’s telecoms sector. India has a huge national telecommunications network. The fixed-line market remains highly underdeveloped due to the dominance of the mobile segment. Furthermore, the number of fixed telephone lines is slowly declining as the mobile segment continues to expand. Overall penetration dropped from 2.1 percent in 2014 to 2.0 percent in 2015 and 1.9 percent in 2016.
With fixed-line penetration falling below three percent, the country has nevertheless achieved remarkable coverage, with 99 percent 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 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 competition, with 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 (£46 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, there is now hope for a serious expansion of this segment of the market. Mobile broadband has also had an impact on the market and by 2016 was already dramatically changing the internet sector.
The 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 was a major push to take mobile services into the poorer and more rural areas of the country, a move that inevitably brought down Average Revenue per User (ARPU) levels.
India’s mobile market dominates the local telecoms sector with its large subscriber base and revenue numbers, as well as the huge capital investment by operators. It continues to be a highly competitive market in which a number of major players as well as a larger number of minor players have been battling to increase market share.
India’s mobile market has experienced very strong growth over the last five years. Mobile penetration has risen from 72 percent in 2011 to 81 percent 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 a 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 is predicted over the next five years, with mobile penetration exceeding 90 percent by 2021.
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 through 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 potential for further development, the Indian telecoms market continues to present a number of challenges for mobile operators.
Companies have struggled to maintain 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 the digital economy
Despite a booming internet market across the country, India’s move into high-speed broadband internet access has been distinctly sluggish. For a 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.
India’s fixed broadband market remains underdeveloped, due mainly 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 marginally. During 2015/16 the market grew by nearly 10 percent. Moderate growth is predicted for the next five years.
In November 2015, Bharti Airtel allocated an investment of INR600 billion (£4.9bn) 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 telecoms minister confirmed that the government has no plans to disinvest in MTNL and BSNL.
By 2016, BSNL was expected to shut down its WiMAX network in areas with small subscriber bases or where equipment had broken down. In June 2016, BSNL launched Wi-Fi Mobile Data Offloading services 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, with some digitisation 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.
Global Seven News