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India: India Communication Profile

2016/12/04

India’s Mobile Market Continues to Boom

India’s Mobile Market Continues to Boom

Despite setbacks, India continues to be one of the fastest growing major telecom markets in the world. It is as well one of the major. 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 spending as the operators expand their infrastructure. The mobile market continues to be the major 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. In general 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 completed a remarkable coverage, 99% of the people having some form of access to a telephone. There has been heavy investment in telecoms infrastructure over the last decade to service the huge people. The government and the operators push forward on a number of fronts to speed up the roll-out of services to the wider people. Market leader BSNL’s market share has dropped significantly over the completed 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; next a period in which broadband development languished, and there is presently hope for a critical expansion phase in this segment of the market. Mobile broadband has as well impacted the market and by 2016 was by presently dramatically changing the internet sector.

Mobile Market

Over the completed 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, inclunding 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 increase 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 increase in subscribers the market is shifting to price-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 request for mobile services. Further strong increase 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 major mobile operator by subscribers next Bharti Airtel, and just ahead of Vodafone.

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

Despite its huge increase and its potential for further increase, 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 as well 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. At the same time as it came to high-speed broadband access, for long time there was a reluctance to adopt what was on offer, particularly within the corporate sector, and the increase 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 increase 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 all south

By 2016 India was making good evolution on the government-mandated digitisation program. There are by presently 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.

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