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4G technology in India exceeding 90M subscribers in 2018

Airtel as the first telecom to introduce 4G in India and the new entrant, Jio around the corner, the fight to capture the share of mobile data business in India has already commenced.

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Definition / Scope

4G which is also the abbreviation for the Fourth generation is a mobile internet network which is developed to replace the existing network i.e. 3G, intended to provide wireless broadband access at a rapid data download speed. The Pioneer of the 4G was Sweden as it introduced the technology to the world, first time in 2009. The average download speed on 4G network is 100 Mbps with upload speed of 50 Mbps respectively.[1]

Market Overview

As of 2015, there are 277 million mobile internet users in India. The number of mobile subscribers are 988.69 million. The first prospective users of 4G will be the existing 82 million 3G users. The data penetration in India is growing at a faster pace as the both GSM and CDMA subscribers' data usage per month was recorded at 61.66 MB in 2014 which grew to 99.46 MB in 2015 a year later. Thus, it showed a growth rate of 61 percent in a year which shows that the data usage is picking up among the consumers in India.[1]

As of 2017, the internet statistics of India reveal that the total internet penetration is limited to 34.4%. With an average data usage per subscriber per month on 2G, 3G and 4G network at 1,945 MB. In total data usage, the 4G comprised of 82% followed by 3G at 16% and 2G at 2% respectively.[2]


Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet

Market Risks

Jio's USP (Unique Selling Point) will be the technology which it will be using over its 4G network also known as VoLTE or Voice-over-LTE which would enable a HD quality calls in 4G network. However, there are 10 million 4G handsets of which most are not VoLTE enabled. Top smartphone brands such as Samsung has denied to join Jio and use this technology in their handsets.[1]

There is also the request to the government of India to start free Wi-Fi over various zones throughout the country by the public. Giant companies such as Google have already planned projects to deliver high speed free internet at zero cost to consumers which is going to be one of the core products. This is one of the biggest threats of future to the companies operating within the industry.[1]

Top Market Opportunities

The companies have to look for the pain points of the consumers. As transitioning into 4G network requires a 4G SIM, Airtel is hopeful of providing its customers, delivery of SIM within 4 hours from the requested time. They are also focusing on to reduce the number of steps involved in the delivery. Thus, other companies should look out for similar pain points and come up with solutions to mitigate such problems in order to acquire more customers and develop the overall ecosystem.[1]

Rural India accounts for 70 per cent of the population and has a mobile penetration of 50 percent. This figure suggests that gradually the rural India is also embracing the telecom technology, thus this sizable market of rural India can also be considered for 4G penetration as the focus of all the players in the market is to acquire as many customers as possible at present.[1]

4G technologies must be developed in such a manner that they can cater to the customers for multipurpose usage. For instance an m-learning model can be devised with the help of this technology where students can login to their notebook through valid username and passwords and can get information in terms of different multimedia applications like plain text, pictures, audios and videos and at the same time authorized instructor can upload information or contents easily with instant notification at any time. Similarly, banking penetration is low in rural areas so related services with high security can be accessed through smartphones. Also, payment banks can be associated to increase access to banking related services anywhere, anytime and anyplace. [3]

Market Drivers

As of 2017, the smartphone penetration has increased by 44% to reach 26.5 million. Figuring out the market of India cheaper smart phones with 4G compatibility are being manufactured within the country. Similarly, app usage grew by 131% supported by a strong IT presence. India is gradually transitioning into the 4G as the demand for internet use rises along with these activities.The launch of 4G services has led many businesses to develop an ecosystem in terms of devices, applications, services etc. This has further improved the data market in the country. [4]

As all the industries are moving towards the online spectrum, the online services platforms such as e-health, e-education, e-governance and banking are major contributors to drive the growth of data market in India.[4]

Market Restraints

The most discouraging tasks for the companies would be to convince subscribers to get new handsets which are compatible with 4G network. [1]

95 per cent subscribers in India are still using prepaid network so the APRU would be around Rs 160 per month which is among the lowest in the globe. As India is a populated country and the cut-throat competition everywhere leads people to become economical. Thus, companies usually compete in the industry by using the cost leadership strategy which is why the margins they earn in their product/services are quite slim. The same situation applies to the 4G industry in India.[1]

The problem with 4G network in India was that as its adoption rose, subscriber's number increased which lead to network jam and thus the decrease in average download speeds were relevant. 4G users on the networks of Idea, Vodafone and Airtel all witnessed a drop in average 4G download speeds over the course of 2017. This also marked India as the lowest spot among 77 countries regarding data download speed at 6.1 mbps which is lower than global average of 10 mbps.[5]

Industry Challenges

The number one challenge for all the players competing within the industry is to increase the ARPU (Average revenue per user) from the data because huge investments has already been made by the companies and among the total mobile phone subscribers, a huge portion have still not updated to the 4G network. The main reason is the price as despite of the perks like higher speed in 4G, the 3G data plan is cheaper. Thus, it may take time for consumers to adopt 4G until a great experiences is provided by the companies involved.[1]

There is lack of consolidation of the telecom market in India, with proliferation of subscribers across various networks and network congestion there have been noticeable problems like data speed. If minor players in the market operate within their own spectrum and deny to combine their holdings, a more sophisticated LTE-Advanced technology cannot be developed and 4G technology in the country will remain standing. [5]

The quality of service is another struggle for the companies. In the rural areas of the country the data coverage has not met the standards and are unreliable due to lack of infrastructure whereas in urban areas the technology i.e. LTE which has been deployed increases consumer expectation of heavy data content such as games, video with HD quality steam and speeds. However these demands have yet not been satisfied by the companies.[3]

Journey from 3G technology to 4G LTE requires high capital investment for the service providers due to the high costs and upgrades in network grid setups. The biggest risk, therefore for an operator is to justify the ROI. For instance, Jio doesn’t have a positive return on investment until fifth year of the investment. Thus, biggest challenge for companies is to cope up with the gestation period which is going to be long until the companies are able to realize true profits.[3]

Technology Trends

Jio is one company in the industry which has built a breakthrough application called 'Switch N Walk' which lets the users to transfer the data from one mobile device to another within 5 minutes i.e. also similar to the concept of transferring money digitally. They have truly utilized the agility of internet and digital technology to address to consumer needs.[1]

Big data analytics has become the new favorite tool for the companies involved in the industry as these are essential to understand the needs and demands of consumers, network optimization and also efficiency of operations within the organization. The data generated from the system is used to create innovative ideas based on insights received.[4]

Pricing Trends

The hyper-competitive landscape of the 4G industry in India has already dragged down 4G prices in India to the lowest in the world. The Airtel is offering at $6.81 per month for five mbps and the new player in the market, Jio is expected to offer the same at $4.07 to $6.81 per month. These prices are 1/5th or 1/8th of what the data providers charge in countries like U.S or U.K.[1]

Since 4G has recently been implemented and it is still going to be a long journey until the Indian's embrace this technology fully. As this is a nascent phase of 4G in India, all companies have strategy to keep the prices low until demand rises. The prices are kept low to increase the share of customers because as the technology gets upgraded, high prices can be charged and this will attract new users to the market.[1]


Regulatory Trends

The government of India has initiated the project 'Digital India' whose main purpose is to use trending technology means such as cloud, Internet of Things (IoT), analytics and big data and even 4G services. These technologies are promoted to be implemented across entities such as payment banks and even big infrastructure projects. This will lead to substantial increase of voice and internet data across the county.[4]

Market Size and Forecast

As per the TRAI report, there are a total of 370 million wireless internet users in the country. Out of this figure, 2G internet users using GPRS technologies constitute 152 million whereas 3G users with HSPA technologies constitute 128 million subscribers and The total number of 4G subscribers in the country on LTE technology which was 87 million in 2016 grew up to 238.34 million in 2017.[2]

The new player Jio which recently started off its operations in 2016 and introduced a nationwide 4G network had revenue of 630 million in quarter end of 2017. Similarly, the other players such as Airtel, Vodafone and Idea had earned respective revenues of $10.01 billion, $6.70 million and $520 million respectively. The Jio noticed an 18 percent increment in revenue score whereas the rest of the companies has a fall of 5.5 percent, 4.8 percent and 8.8 percent respectively. However overall revenue of the Industry was recorded at $31 billion which decreased by 8.2% as compared to 2016.[6]


Market Outlook

For every Rs 100 ($1.36) revenue earned by cellular service providers, $0.917 is income comes from calls and $0.34 from data.[1]

The low spread of smart phones and LTE handsets in India has still not opened the doors to new 4G technology so there is room to grow from 3G and shift to 4G. As of present, India is the only country where 2G, 3G and 4G networks diffusion are happening at the same time.[1]

India is expected to have 90 million 4G subscribers and 180 million 4G smartphones by 2018.[1]

Mobile data consumption is expected to reach 1,869 petabytes per month by 2020 in India. [4]

Distribution Chain Analysis

4G's presence is prominent in 22 circles in India.

Kolkata is the only region among 22 telecom circles in India with a 4G availability score over 90 percent. Among 22, 21 circles saw a 4G penetration score over 80 percent. After Kolkata, Punjab was second in the list of 4G availability at 89.8 percent with Bihar at third position with 89.2 percent and others in top five list were Madhya Pradesh with 89.1 percent, and Orissa on 89 percent.

Surprisingly, metro cites like Delhi and Mumbai, ranked 12th and 13th respectively with 86.73 and 86.65 percent 4G coverage.[7]

Competitive Landscape

There are basically four major industries which are competing in the 4G data technology in India which are the follows:

  • The net worth of the Reliance Industries (RIL) is $62.2-billion and it is investing $10 billion to start the telecom company Jio;
  • Followed by Bharati Airtel, a $15.1-billion company which invested an estimated amount of $4billion in launching 4G services in 296 cities all over India.
  • Then the 42.2-billion pound Vodafone Company's Indian Subsidiary has invested around $1.7 billion and is in a full swing to venture into 4G technology.
  • Finally, $41-billion Aditya Birla Group which owns the 'Idea' telecom company is about to invest $1.8 billion for introduction of 4G services in 2016.[1]

At present the big players are Jio and Airtel with Jio being the new entrant and the most disruptive player in the industry. They are consistently fighting with one another not only for market share but to become a market leader in terms of size, presence, popularity, revenue etc. and the small players who are likely to cater to the rest of the consumers in the market are Idea and Vodafone that started off late.[1]


Competitive Factors

  • A telecom company with minor share in the industry, Telcos anticipate a multi-billion prospect by catering to the demand of the consumers for internet by providing super fast broadband with speeds up to 100 mbps as the current technologies deliver just 8-20 mbps. [1]
  • Airtel is the only company which launched the 4G at 3G rates. This infers that the existing 3G base are likely to spontaneously upgrade to 4G. Further, after the launch of Jio, Airtel is planning to reduce data tariffs by 25 percent, this will help the company to earn maximum subscribers and further put pressure on Jio as they need to provide the same service at a lower price in order to acquire maximum customers.[1]
  • Both Airtel and Jio which are the big players in the industry are simultaneously developing subordinate apps related to entertainment and payment services. Airtel has introduced an app called Wynk movies which will have content of big video streaming companies. It is also providing the users with free access to five movies a month to users who are subscribing to a particular data plan of airtel.[1]
  • Jio has one in all multi-purpose app which is further divided into sections such as Jio money (For payment), Jio Chat (Indian chat version of Whatsapp), Jio drive (cloud services), Jio Play (Set-up TV) and Jio beats ( Music). Jio plans to provide unique and ultimate experience to customers by becoming the market leader in each of the respective arena and the strategy is particularly to utilize technology to increase the use of data among people by providing data plans through these alternative channels.[1]
  • Before the entry of Jio in the 4G data market, Airtel was the market leader.Jio, for example, has set out an optic fiber network across the country measuring 2.5 lakh km, Airtel has a similar network which is shorter at 1.99 lakh km. This is targeted in posh cities of India such as Mumbai and Delhi to meet the internet and telephone requirements of the affluent customers.[1]

Key Market Players

The top 10 players in the market according to the market share of number of subscribers of 4G data in India are:[2]

  1. RJIL (Reliance Jio Ltd.)
  2. Bharati Airtel Ltd.
  3. Vodfone
  4. Idea Cellular
  5. BSNL
  6. Aircel
  7. Telenor
  8. Tata teleservices
  9. Reliance Communications
  10. MTNL

Strategic Conclusion

Although the players competing within the industry are limited, there is lack of healthy competition but a tendency to dominate over the counterparts. Rather, the focus should be to perform and deliver the service better and this can be implemented by adopting the effective regulation. Further, rural areas in India are not open to innovative ideas and are more reluctant in embracing new technologies. Awareness campaigns can be rolled out across such areas and finally, clear policies addressing to the issues within the industry are required. Within 2020, India is expected to overcome all the hurdles and transition into a fully grown 4G power.


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