You are unable to edit this page, please log in to edit .
This page seems to be incomplete!
55%
Please help us to improve this report - add or edit content. Top editors receive sponsorship revenues that this report may get. (see all pages having same badge)

Telco industry in India to reach US$ 4.75B by 2021

India is the world’s 2nd largest telecommunications market, with 1.191 billion subscribers as of 2018. The telecom tower industry is estimated to grow at a CAGR of 4% to reach USD 4.75 billion by 2021.

  • Page views 1012 views
  • Page contributors 2 Editors
  • Page update date Updated 10 months ago

Definition / Scope

As per TRAI Act definition “telecommunication services”, cover a range of sectors, including basic and cellular telecom services, provision of Internet access and broadcasting services.

  • Mobile: It comprises establishments operating and maintaining switching and transmission facilities to provide direct communications via airwaves including GSM, CDMA, and LTE network.
  • Fixed-line: It consists of companies that operate and maintain switching and transmission facilities to provide direct communications through landlines, microwave or a combination of landlines and satellite link-ups.
  • Internet Services: It includes Internet Service Providers (ISPs) that offer broadband internet connections through consumer and corporate channels.
Definition telco.PNG

Market Overview

India is the world’s 2nd largest telecommunications market, with 1.191 billion subscribers as of 2018. Telecommunication contributes 6.5% to India’s GDP and generates over 4 million jobs.

In terms of telecommunication ratings, India ranks ahead of its peers in the West and Asia. There are more than 114.63 million mobile subscribers in India who access 3G/4G.

Telecom penetration in the nation’s rural market reached 56.63 percent, as of January 2018. India became the 2nd largest internet market in December 2014.

India’s telephone subscriber base expanded at a CAGR of 19.22 percent, reaching 1,194.58 million during 2007–17. Total subscriber base stood at 1,191.40 million in 2018.

Tele-density (defined as the number of telephone connections for every 100 individuals) in India, has increased from 17.9 percent in 2007 to 91.20 percent in 2018.

Overall, there is a dramatic increase in the number of internet subscriptions in the recent few years. Also, as the trend in wireline telephone subscription is leveing off but at the same time, there is a gradual surge in wireless telephone subscribers.

Internet service subscription has reached 481.7 million in 2018 from 236.09 in 2016. In 2017, there was 53.3% growth in the internet subscription while it was just a 32% increment in 2018. The number of wireline telephone subscribers in 2018 has slightly decreased to 22.11 million from 23.23% in 2017. There were 24.4 million subscribers of wireline telephone. During 2016-018, wireless telephone user base is marginally going up from 1127.37 million in 2017 to hit 1169.29 in 2018.

Urban subscription reached 666.64 million in 2018 while the rural subscription base touched 524.76 million.

In 2015, the mobile industry in India provided direct and indirect employment to 4 million people and is estimated to add 1 million more jobs by 2020.

FDI inflow of USD 30,029.84 million has been entered in Indian since 2000.

Market overviewe subscr2.PNGMarket overview subscription1.PNG

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

Low switching cost and mobile number portability give price sensitive customers high bargaining power to opt for another service provider.

Rapidly Falling ARPU (Average Revenue Per User):

The heady days of rising ARPU (average revenue per user) are long over. But the ARPU decline now is sharp and steady, which, combined with falling profits and in some cases, serious losses are prompting the Indian telecom industry to look at consolidation as the only way to boost revenues.

Top Market Opportunities

Going Rural:

With 70 percent of the population staying in rural areas, the rural market would be a key growth driver in the coming years. The government of India has introduced the Digital India programme under which all the sectors such as healthcare, retail, etc. will be connected through the internet. By January 2018, rural teledensity reached 56.63 percent, growing from 43.05 percent as of March 2016

By January 2018, rural wireless teledensity in the country increased to 56.25 percent, while, the urban wireless teledensity reached 159.39 percent during the same period.

Internet Penetration:

Internet penetration is expected to grow steadily and is likely to be bolstered by government policy. The number of broadband subscribers reached 378.10 million at the end of January 2018. To encourage cash economy, the Indian government announced to provide free Wi-fi to more than 1000 local bodies (gram panchayats).

Boost to Telecom Manufacturing Companies:

In line with the ‘Make in India’ theme, exemption from basic customs duty, countervailing duty, and special additional duty have been withdrawn on chargers, adapters, battery, wired headsets and speakers for mobile phones. This will help local manufacturers by making imports costlier. Correspondingly, to encourage local manufacturing, import duties on inputs that contribute to the making of such parts and components have been removed.

Market Drivers

Higher real income and changing lifestyles:

Incomes have risen at a brisk pace in India and will continue rising given the country’s strong economic growth prospects. Nominal per capita income recorded a CAGR of 4.36 percent from 2011-12 to 2016-17.

Increasing income has been a key determinant of demand growth in the telecommunication sector in India. The IMF estimates nominal per capita income in India to expand at a CAGR of 4.94 percent during FY10–FY19. Per capita income in the country is estimated at USD1, 611.40 in FY17.

Growing young population:

The emergence of an affluent middle class is triggering demand for the mobile and internet segments. A young, growing population is aiding this trend (especially demand for smartphones). India has more than 65% population between 20-35 age bracket.

Strong policy support:

In October 2015, Telecom Regulatory Authority of India announced an amendment for Telecom Consumer Protection Regulations 2012 according to which mobile service operators have to provide compensation to the users in case of call drop.

One of the projects under the ‘Digital India’ initiative was ‘BharatNet’, launched to deploy high-speed optical fiber cables to connect 2.58 lakh Gram Panchayat across the country by 2018. This project would also help in increasing the fiberized sites in India which currently stands at less than 20 percent as compared to other developed countries.

Increasing MOU and data usage:

In May 2017, Microsoft India signed a Memorandum of Understanding with the Telcom Sector Skill Council (TSSC) to encourage skill development through “Project Sangam”.

Reduction in license fee:

In January 2015, the Government of India recommended a reduction in license fees of telecom operators by 6 percent, telecom operators currently pay 8 percent of adjusted gross revenue as license fee.

Relaxed FDI Norm:

FDI cap in the telecom sector has been increased to 100 percent from 74 percent; out of 100 percent, 49 percent will be done through automatic route and the rest will be done through the FIPB approval route. FDI of up to 100 percent is permitted for infrastructure providers offering dark fiber, electronic mail and voice mail. Cumulative FDI inflows into the telecom sector over April 2000 – December 2017, totalled to USD 30.08 billion.

Encourages firms to expand to rural areas:

Under National Telecom Policy-2012, the government has pledged to increase rural teledensity from 39 to 70 percent by 2017, and 100 percent by 2020

Declining tariff rate:

National Telecom Policy-2012 aims at a ‘One Nation-One license’ regime with no roaming charges and nationwide number portability. Consumption of video content is also forecasted to be 75 percent of India’s mobile data traffic by 2021, compared to 49 percent in 2016. The telecommunication market witnessed a paradigm shift from voice-centric to data-centric.

Market Restraints

Limited Spectrum Availability:

Available spectrum is less than 40% as compared to European nations and 50% as compared to China. Hence, it is imperative that spectrum auctioning at sustainable prices is the need of the hour.

Low Broad Band Penetration:

Low broadband penetration in the country is a matter of concern and the government needs to do a lot more work in the field to go up on the global ladder. As per white paper presented on broadband at the last ITU (International Telecommunication Union), broadband penetration in India is only 7%.

  • In this digital era, the telecom operators are facing increasing challenges. Communication tools such as Weixin, Weibo, Facebook, and Twitter have reduced the traditional profits of the telecom operators for messaging and calling. As they are trying to avoid becoming just simple channels.
  • Companies have to bring subsidizing low-cost Android-based devices in the market to reach low-end users.
  • There is high competition in the market with insufficient spectrum available for auction.
  • The number of CDMA voice subscribers is declining continuously with a negative growth rate as they switch to GSM services. EVDO networks have shifted to Rev B with peak download speeds.
  • India going on the path to use more local products for raising country’s economy. BSNL is also going digital to compete in the market.
  • Broadband is a good alternative of the mobile data. With operators having differential charges of services broadband is gaining popularity.
  • More and more public places are offering free wi-fi services to their customers. This is challenging for the telecom companies. Jio is offering hotspots to enable Wi-Fi offloading. TATA and Vodafone are also active players in this domain.

Industry Challenges

Rising competition

Customers’ low switching cost and price sensitivity are increasing competition among players and high exit barriers are also intensifying competition. There are around 6 to 7 players in each region, leading to intense competition. There exists a high bargaining power of suppliers as there are just a few suppliers in the sector and thereby the high cost of switching suppliers.

Pressure on Margins Due to Stiff Competition

With competition heating up post entry of Reliance Jio, other telecom players are feeling the heat of substantial drop in tariff rates both for voice and data (more significant for data subscribers). TRAI needs to fix a base price and help create a level playing ground for all players.

Installation of tower

Telecom Service Providers (TSPs)/Infrastructure Providers (IPs) in India spend significant capex on receiving Right of Way (RoW) permissions from local governments and municipal bodies. RoW permissions are a prerequisite for TSPs to be able to deploy optical fiber. Currently, IP-1s have not been included in the purview of the notification and are therefore not permitted to provision duct and OFC.

Electricity-related issues

Erratic power supplies/ non-availability of power hinders the smooth operations of telecom tower infrastructure. Around 40 percent of the telecom towers face load shedding for more than 12 hours per day.

Technology Trends

BWA Technology:

The most significant recent developments in wireless communication include BWA technologies such as WiMAX and LTE. In March 2018, Bharti Airtel launched its VoLTE services in Kolkata while Vodafone launched VoLTE services in Jaipur and Jodhpur. Reliance Jio has launched 4G services across pan- India as on December 2015

IOT:

IoT is the concept of electronically interconnected and integrated machines, which can help in gathering and sharing data. The Indian Government is planning to develop 100 smart city projects, where IoT would play a vital role in the development of those cities.

Voice over Internet Protocol (VoIP)

The Voice Over Internet Protocol (VOIP) has fulfilled the low-cost demand in domestic and international calls. VOIP has gone mainstream in 2017 whereby allowing the exchange of voice over internet protocol packet switches.

Mobile Number Portability (MNP)

MNP allows any subscriber to change his service provider without changing his mobile number. At present, if a subscriber wishes to change service providers, the subscriber would lose the benefit of having a known mobile phone number. This has formed deterrent for the subscriber to move between service providers irrespective of the quality of service and competitive pricing.

Pricing Trends

The pricing strategy of per second billing has already taken the price war between telecom operators to the next level. The intensifying price war could put significant downward pressure on industry revenue growth. Further, the ongoing price war and the concomitant decline in telecom traffic could raise the entry barrier for new companies.

Declining tariffs over the years have been a key enabler for the rapid and widespread adoption of voice services. Local call tariffs for mobile services, which were roughly around USD 0.11 per minute in 2000 are now around USD 0.007. A one-minute Subscriber Trunk Dialing (STD) calls between Delhi and Mumbai, which was at the rate of USD 0.53 is now available to users at the rate of a local call, and an International Subscriber Dialling (ISD) call to the American continent costs less than USD 0.1, down from about USD 1.07 in the year 2000.

Average tariff for mobile services, which were roughly around USD 0.122 per minute in 2000 is now around USD 0.0023.

Telcos' monthly average revenue per user (ARPU) has declined by a massive 42 percent even as telecom subscribers in the country have increased 28 percent. The monthly average revenue per user (ARPU) had declined by a massive 42 percent since Jio's launch from USD 1.87 in Sep 2016 to USD .09 in March 2018 for GSM users.

Reliance Jio arrived in the Indian telecom sector as a disruptive player offering customers free domestic voice calls and zero national roaming charges till 31 March 2017.

This move has forced Airtel, Vodafone, and other telecom operators to launch new plans and recharge packs of their own, offering unlimited voice calls, and various data benefits, in order to retain users.

Telecom operators are trying to refresh their value-added service (VAS) offerings, including partnerships with VAS providers and start-ups.

Price1per min.PNG

Regulatory Trends

DoT was created within the Ministry of Communications in 1985 to focus on enhancing the quality of telecommunication services. DoT was responsible for telecom services in the entire country until 1986 when Mahanagar Telephone Nigam Limited (MTNL) and Videsh Sanchar Nigam Limited (VSNL) were carved out of DoT to run the telecom services of metro cities (Delhi and Mumbai) and international long distance operations respectively.

The most important milestone and instrument of telecom reforms in India are the New Telecom Policy 1999 (NTP 99) which laid down a clear roadmap for future reforms, contemplating the opening up of all the segments of the telecom sector for private sector participation.

The entry of private service providers brought with it the inevitable need for independent regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.

The government has been proactive in its efforts to transform India into a global telecommunication hub; prudent regulatory support has also helped.

National Telecom Policy 2012 calls for unified licensing, full MNP and free roaming.

The Government of India is soon going to come out with a new National Telecom Policy 2018 in lieu of rapid technological advancement in the sector over the past few years.

Green Telecom

The green telecom concept is aimed at reducing the carbon footprint of the telecom industry through lower energy consumption, Tata has invested around USD16.38 million to convert its 10,000 base stations from indoor to outdoor to reduce energy consumption and carbon footprint across its 20 telecom circles in India so far.

PPP model

There are over 62,443 uncovered villages in India; these would be provided with the village telephone facility with subsidy support from the government’s Universal Service Obligation Fund (thereby increasing rural teledensity). As of January 2018, the rural subscriber base accounted for 42.76 per cent of the total subscriber base, thereby fuelling growth across the sector.

The Telecom Regulatory Authority of India (TRAI) has recommended a Public-Private Partnership (PPP) model for BharatNet, the central government's ambitious project to set up a broadband network in rural India, and has also envisaged central and state governments to become the main clients in this project.

Cellular Operators Association of India (COAI)

COAI was constituted in 1995 as a registered, non-governmental society. COAI’s vision is to establish India as the global leader of innovative mobile communications infrastructure, products and services and achieving a national teledensity of 100 per cent, including broadband. The association is also dedicated to the advancement of modern communication and towards delivering the benefits of innovative and affordable mobile communication services to the people of India.

Association of Unified Telecom Service Providers of India (AUSPI)

Constituted in 1997, AUSPI is a registered society that works as a non-profit an organisation with the aim of delivering improved access to, coverage of and teledensity in India. It is the representative industry body of unified access service licensees providing CDMA and GSM mobile, fixed line and value-added services across the country.

Towers and Infrastructure Providers Association (TAIPA)

TAIPA is the body of infrastructure providers who service telecom operators. It plays an active role in deliberations with ministries, policy- makers, regulators, financial institutions and technical bodies for promotion and growth of telecom infrastructure and telecom services.

Indian Cellular Association (ICA)

ICA is the apex body of the mobile industry and includes brand-owners, technology providers, manufacturers, national distributors, applications, and solution and VAS providers. It was constituted to provide value and services to India’s mobile cellular handset industry by fueling its growth and improving its competitiveness by helping to create a legal and ethical market, and regulatory environment. This is expected to result in the benefits of mobile connectivity being extended to the masses.

GSM Association (GSMA)

The GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with more than 300 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organizations in adjacent industry sectors. The GSMA also produces industry-leading events such as Mobile World Congress, Mobile World Congress Shanghai, Mobile World Congress Americas and the Mobile 360 Series of conferences.

Other Key Market Trends

4G

The infrastructure for 4G is being rolled out in India since 2012.

  • Major telecom companies have introduced 4G plans in the past two years, but there are a number of issues related, such as network congestion and delay in data monetization ideas among telcos that is preventing the increase in the number of 4G connections in India.
  • 4G has become a favorite of consumers with dual SIM cards, where 4G is used as an auxiliary service while 3G is still the major services.
  • With the launch of Reliance Jio, telecom operators are investing heavily in network infrastructure to mitigate the issues of network congestion.
  • Telcos are leveraging both TDD-LTE and FDD-LTE standards to offer 4G connectivity in the country.

Market Size and Forecast

Indian telecom sector’s revenue grew at a CAGR of 7.31 percent from USD 19.6 billion in 2006 to USD 42.6 billion in 2017. During the first half of 2018, gross revenues of telecom sector in India reached USD 20.4 billion.

Revenues from the telecom equipment sector are expected to grow to USD 26.38 billion by 2020.

As per Union Budget 2018-19, Government of India is expecting a 58 percent increase in telecom sector revenue.

The telecom sector has grown at 19.6 percent CAGR in terms of subscriber base and at 7.07 percent CAGR from a revenue perspective over the last few years.

Market size1telco.PNG

Market Outlook

Telecom sector contribution to GDP is forecasted to reach 8.2 percent by 2020.

The total number of SIM connections is expected to reach 1.4 billion by 2020 from the current 1.1 billion. Telecom sector will provide 5 million direct and indirect employment by 2020 from the current 4 million jobs.

The telecom tower industry in India is growing at a steady pace of approximately 6.8 percent CAGR over the last four years and has reached USD 3.64 billion in 2016 and USD 4.16 billion in 2018 respectively. It is estimated to grow at a CAGR of 4% to reach USD 4.75 billion by 2021.

Technology Roadmap

5G

  • 5G is the new generation of radio systems and network architecture delivering extreme broadband, ultra-robust, low-latency connectivity, and massive networking.
  • The immediate benefits that are guaranteed by industry stakeholders are:
    • Enhanced mobile broadband speeds
    • Scale: Internet of Things, Machine-to-Machine and data explosion as a consequence
    • Low latency cases with single millisecond latency, which will create use cases that do not even exist today (e.g., virtual reality with extremely low latency to have real-time experience over a 5G network).
  • Establishing a strong backhaul network for building future proof 5G networks will be essential.

Distribution Chain Analysis

Tower Spectrum:

A surge in the subscriber base has necessitated network expansion covering a wider area, thereby creating a need for significant investment in telecom infrastructure. To curb costs and focus on core operations, telecom companies have been segregating their tower assets into separate companies. For example, Reliance Communications has decided to finalize a deal to sell its stake in Reliance Infratel. The value of the deal is around US$3.68 billion.

Creating separate tower companies has helped telecom companies lower operating cost and improve capital structure; this has also provided an additional revenue stream inspired by the success seen by Indian players in towers business, most of the operators around the world are replicating the model.

To reduce the carbon footprint for telecom infrastructure, including mobile towers, on 1st January, 2017, TRAI (The Telecom Regulatory Authority of India), announced to bring consultation paper, that will review the issues related to carbon footprint.

List of vendor companies

  1. Nokia Siemens Networks.
  2. Huawei
  3. Ericsson
  4. ZTE
  5. Alcatel – Lucent
  6. Ceragon Networks
  7. Juniper Networks
  8. Tejas Networks
  9. NEC
  10. Cisco
  11. Avaya
  12. Nortel
  13. GTL

List of tower infrastructure companies

  1. Aircel
  2. American Tower Company India Ltd.
  3. Bharti Infratel
  4. BSNL Telecom Tower Infrastructure
  5. Essar Telecom
  6. GTL Infrastructure
  7. HFCL Connect Infrastructure-Infotel Group
  8. Idea Telecom Infrastructure
  9. India Telecom Infra Ltd.
  10. Indus Towers Ltd.
  11. Quippo Telecom Infrastructure Ltd./ Viom Networks Ltd.
  12. Reliance Infratel
  13. Tower Vision India Pvt. Ltd

Telecom Customer

Mobile phone ownership and usage also varies along demographic parameters like gender and age. Connected Women 20154, a report by GSMA (Groupe Speciale Mobile Association), found that of the total 612 million female population in India, only 28 percent own a mobile phone as against 43 percent in the male population. The gender gap of mobile ownership is therefore 114 million.

The customer base is categorized as:

  • Mobile (wireless
  • Fixed-line (wireline)
  • Internet Services

Government Bodies

  • Indian government bodies encompassing WPC, DoT, Telecom Commission and GoI Telecom & IT
  • Independent bodies constituting TRAI, TDSAT and AUSPI.

Indian Government Bodies (WPC, DoT, Telecom Commission and GoT Telecom & IT)

  • WPC (Wireless Planning and Coordination wing) is responsible for:
    • Spectrum Management pertaining to frequency.
    • Licensing of wireless stations.
    • Catering to the needs of all wireless users in India.
  • DoT (Department of Telecom)
    • Policyand coordination matters including licensing, relating to telegraphs, telephones, wireless, data and other forms of communication.
    • Framing of rules related to security of telecom networks and coordination with security agencies.
    • Spectrum management and spectrum allocation.
  • Telecom commission
    • Formulate policy.
    • Matters related to telegraphs, telephones, data services and forms of communication of similar nature.

Independent Bodies (TRAI, TDSAT)

  • TRAI: Prime objective of TRAI is to provide complete transparency in the policy environment which in turn will help provide unique opportunities to various telecom players. TRAI provides recommendation on various policy matters and in addition also possesses regulatory and judicial powers.
  • TDSAT: TDSAT has been given exclusive powers to decide on any dispute between:
    • DoT (licensor) and licensee
    • Various service providers and
    • Multiple service providers and customers.

Telecom Service Providers

Telecom service providers (TSP) play a vital role in providing major support services required for swift growth and transformation of multiple sectors such as IT, insurance, education, health, public sector, etc. Indian TSPs have invested about USD 132.43 billion while Foreign Direct Investment (FDI) in the telecom industry has increased from USD 2.86 billion in FY’15-16 to approximately USD 9.57 billion in the first three quarters of FY’16-17, contributing towards building an efficient infrastructure to provide accessible and affordable service to customers.

A fairly conducive regulatory environment has been created for TSPs through implementation of new policies and regulatory framework by Telecom Regulatory Authority of India (TRAI).

Infrastructure Provider

India is home to an infrastructure network comprising of over 450,000 towers1 and over 1.25 million kilometers of fibre. The Indian tower industry has also been on an upward trajectory owing to the growth of telecom sector, grant of ‘infrastructure status’ and its unique business model based on ‘infrastructure sharing’. The model is meant to drive efficiencies and synergies and the era of multiple operators allowed that to happen very successfully leading to upfront savings in capex and time to market.

Infrastructure providers are the backbone of the entire telecom network and with the advent of new technologies and expansion driven business strategies, they are expected to play a pivotal role in the growth story.

Telecom Equipment Manufacturers

Telecom equipment manufacturers play a critical role in the Indian telecom growth story. Rising demand of broadband services coupled with Government Initiatives such as “Smart Cities” and “Digital India”, is driving connectivity in urban and rural areas. This has led to an all-time high focus on telecom equipment manufacturers – both domestic and international. While government has taken a number of steps to incentivise local manufacturing of telecom equipment, at the same time, imports continue to play a major role in the telecom equipment market.

Consistency in tax policies coupled with conducive and predictable regulatory framework would attract more FDI in telecom equipment manufacturing. Strengthening the existing eco-system would help increase domestic value addition.

Distribution telco.PNGDistri2 telco.PNG

Competitive Landscape

The Indian wireless market is one of the world‘s most competitive markets, with 13 operators across 23 wireless circles and 6 to 8 competing operators in each circle.

The private access service providers held 90.03% market share of the wireless subscribers whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 9.97%. The graphical representation of access service provider-wise market share is given below:

BSNL and MTNL, the two PSU access service providers, held 67.51% of the wireline market share.

Top five service providers constituted 97.86% market share of the total broadband subscribers at the end of Sep-18. These service providers were Reliance Jio Infocomm Ltd (252.25 million), Bharti Airtel (99.29 million), Vodafone (51.82 million), Idea Cellular (47.90 million) and BSNL (20.12 million).

Competitivel nad 1 telco.PNGCompet land 23telco.PNGCompt landscp 3 telco.PNG

Competitive Factors

Prices have come down drastically due to tough competition. Call rate in India is the cheapest in the world. Government is providing Electronics India B2B Platform which is inviting various technology players to come and invest through joint ventures. There is a tough competition between companies for reaching maximum population for which they launch different types of tariff plans to reach every level of society. There are short-term, long-term, only calls, only message, or full data plans available in the market.

Companies are increasing their area of reach to different places for which the number of towers is increasing. As more will be the availability of network more will be marked capture. More and more telecom are announcing that they are coming with 4G to stay in the competition. Telecom operators are planning on strategies like to build an open platform that can attract participation from hardware providers, end device suppliers, content developers, and end users. Core competitiveness will be the gene combination of internet and telecom companies. Telecom companies are increasing migration cost for change of mobile numbers and switching service provider.

Main factors on which companies compete are

  1. Improved levels of customer service.
  2. Giving a more personalized customer experience.
  3. Wider range of services.
  4. More flexible pricing options.
  5. Striking partnerships with other players.
  6. Improved network quality.

Key Market Players

In 2018, the top five Wired Broadband Service providers were BSNL (9.15 million), Bharti Airtel (2.24 million), Atria Convergence Technologies (1.36 million), MTNL (0.80 million) and Hathway Cable & Datacom (0.75 million). And the top five Wireless Broadband Service providers were Reliance Jio Infocomm Ltd (252.25 million), Bharti Airtel (97.05 million), Vodafone (51.81 million), Idea Cellular (47.89 million) and BSNL (10.97 million).

Idea Cellular

Idea Cellular is the subsidiary of Aditya Birla group founded in the year 1995. Now Idea offers 3G and 4Gs LTE services on its own spectrum auction in 13 circles of telecom service areas and 340 towns in all over India. Idea strengthened its customer base after launching mobile number portability. The idea is India’s third largest mobile operator in the wireless service provider segment. In January 2017 it was announced that Idea talks to merge with Vodafone in Indian operations.

Vodafone

It is a Brtish based multinational telecommunications company. It was established in 1991. Vodafone is now ranked in world second largest mobile operator in a number of connections. It owns and operates networks in 76 countries and also IT services to corporate clients in 150 countries. Vodafone was entered in India in 2007. It has been expanding its operations across the country overall 22 telecom circles and service to 203 million Indian customers. It is India’s second largest wireless service provider. The free price war of Reliance jio’s impact resulted in an accumulated continuous loss in recent years in India. But its home market is a bright spot.

Airtel

Sunil Mittal founded Airtel in 1995. Airtel is an Indian-Global third largest telecommunications company and the largest in Indian wireless services. It operates in 18 countries and provides GSM, 3G and 4G LTE services with 400 million subscribers. Airtel is credited with pioneering the business strategy of outsourcing all of its business operations with minute factory model of low cost and high volumes. Its strategy has since been adopted by several operators. The transmission towers are maintained by subsidiaries of the Bharti group. Airtel served first-time low call rates in India. Airtel is the first to launch 4G in India.

Reliance Jio

The Reliance Company commercially launched its services in 2016. Reliance Jio Infocomm Limited (RJIL) previously known as Infotel Broadband. Jio crossed 100 million subscribers in just six months of its operation. This is the fastest ramp-up by any mobile network operator anywhere in the world. Jio owns spectrum in 800 MHz and 1,800 MHz bands in 10 and 6 circles, respectively, of the total 22 circles in the country, and also owns pan-India licensed 2,300 MHz spectrum. The spectrum is valid until 2035.

The company has a network of more than 250,000 km of fiber optic cables in the country, over which it will be partnering with local cable operators to get broader connectivity for its broadband services. With its multi-service operator (MSO) license, Jio offers its not only 4G broadband services but also provides data, network, instant messaging, live TV, movies on demand, news, streaming music, digital payments platform, and free Wi-Fi hotspot services etc. It offers VoLTE, which allows for high-definition voice calls to be placed over the data network.

Mahanagar Telephone Nigam Limited (MTNL)

The government established MTNL in 1986 and was incorporated as a limited company to manage & control telecommunication services in the two metropolitan cities of Delhi & Mumbai. The jurisdiction of the company comprises the city of Delhi and the areas falling under the Mumbai Municipal Corporation and Thane Municipal Corporation. MTNL was set up because the telephones in big cities were so difficult that a mere Departmental undertaking could not run it.

The vision of the company is to provide world-class telecom services at affordable rates and ultimately to become a total solution provider in the telecom sector. MTNL had enjoyed monopoly till 2000 in the two metro cities of Delhi and Mumbai, where it operates. Since then the private operators have started providing basic services in Mumbai and are expected to do the same soon in Delhi. Increased competition from private operators was expected during the tenth plan.

Bharath Sanchar Nigam Limited (BSNL)

After finalization of various financial and HRD aspects, the business of running telecom operations throughout the country except in the metros of New Delhi and Mumbai, the service providing functions of the Department of Telecom Services (DTS) and DTO were transferred to the newly created company BSNL. The two newly carved out service providing Departments from the DOT, namely the Department of Telecom Services (DTS) and Department of Telecom Operations (DTO) were corporatized ahead of schedule and a Public sector company “Bharath Sanchar Nigam Ltd. (BSNL)” was given all the service providing functions performed by these two Departments in 2000 and began its existence as a fresh entity.

The creation of BSNL was expected to provide a level playing field, in all areas of telecom services, between government operators and private operators. With the corporatization of the two service providing Departments Viz. DTS and DTO in to a PSU “BSNL”, the role of Telecom commission has been changed. After shedding the direct responsibility of service providing functions of the DOT, Telecom commission was responsible for policy formulation, licensing, wireless spectrum management, administrative monitoring of PSUs, research and development and standardization, validation of equipment etc.

Market playter tleco.PNGCompe landscpe 4telco.PNG

Strategic Conclusion

With the 2020 Vision to achieve 8.2% contribution from Telecom industry, the sector acts as a backbone for multiple key sectors of the economy and with the ongoing explosion in data, the outlook for the sector remains positive. The industry’s collaborative approach with the government and regulatory bodies has been playing its part for the development of the sector as well as furthering the government’s welfare initiatives.

Nevertheless, certain key steps are required for the industry to contribute in the process more effectively to be taken to ensure efficiency as well as sustainability. The proactive government should help private players to minimize financial burden by promulgating the policies that act on the interest of fair market competition.

Further Reading

Appendix

  • GDP- Gross Domestic Product
  • 3G/4G- 3rd Generation. 4th Generation
  • CAGR- Cumulative Annual Growth Rate
  • FDI- Foreign Direct Investment
  • CDMA- Code Division Multiple Access
  • GSM- Global System of Mobile
  • TRAI- Telecom Regulatory Authority of India
  • Telco- Telecommunication


Share this page: