Indian telecommunication industry in post pandemic
Introduction
India is currently the world’s second-largest telecommunications market
with a subscriber base of 1.20 billion and has registered strong growth in
the last decade and half. The Indian mobile economy is growing rapidly
and will contribute substantially to India’s Gross Domestic Product (GDP)
according to a report prepared by GSM Association (GSMA) in
collaboration with Boston Consulting Group (BCG). In 2019, India
surpassed the US to become the second largest market in terms of
number of app downloads.
The liberal and reformist policies of the Government of India have been
instrumental along with strong consumer demand in the rapid growth in the
Indian telecom sector. The Government has enabled easy market access
to telecom equipment and a fair and proactive regulatory framework, that
has ensured availability of telecom services to consumer at affordable
prices. The deregulation of Foreign Direct Investment (FDI) norms have
made the sector one of the fastest growing and the top five employment
opportunity generator in the country.
Market Size
India ranks as the world’s second largest market in terms of total internet
users. The number of internet subscribers in the country increased at a
CAGR of 45.74 per cent during FY06-FY19 to reach 636.73 million in
FY19. The internet subscribers reached 687.62 million by September
2019. Total wireless data usage in India grew 10.58 per cent y-o-y to
19,838,886 terabytes between July-September 2019.
India is also the world’s second largest telecommunications market. It’s
total telephone subscriber base and tele-density reached 1,177.02 million
and 87.45 per cent, respectively, as of January 2020.
Gross revenue of the telecom sector stood at Rs 121,527 crore (US$
17.39 billion) in FY20 (April-September 2019).
Over the next five years, rise in mobile-phone penetration and decline in
data costs will add 500 million new internet users in India, creating
opportunities for new businesses.
Investment/Major Development
With daily increasing subscriber base, there have been a lot of investment
and development in the sector. FDI inflow into the telecom sector during
April 2000 – March 2020 totalled US$ 37.27 billion according to the data
released by Department for Promotion of Industry and Internal Trade
(DPIIT).
Some of the developments in the recent past are:
India had over 500 million active internet users (accessed Internet in the last one month) as
of May 2020.
In June 2020, Jio Platforms Ltd. sold 22.38 per cent stake worth Rs 1.04 trillion (US$ 14.75
billion) to ten global investors in a span of eight weeks under separate deals, involving
Facebook, Silver Lake, Vista, General Atlantic, Mubadala, Abu Dhabi Investment Authority
(ADIA), TPG Capital and L. Catterton. This is the largest continuous fundraise by any
company in the world.
In April 2020, Vodafone Group Plc infused Rs 1,530 crore (US$ 217.05 million) in
Vodafone Idea as accelerated payment to help the company manage its operations.
As of January 2020, more than 542 banks were permitted to provide mobile banking
services in India.
In December 2019, Airtel disclosed its plans to invest US$ 2.86 billion in its business
as part of company’s annual target.
As per a report by Ericsson, India has the world’s highest data usage per smartphone
at an average of 9.8 GB per month.
As of August 2019, Jio's IoT platform was ready to be commercially available from
January 2020.
In August 2019, Reliance commercially launched Jio GigaFiber as a wired broadband
service.
During Q12018, India became the world’s fastest-growing market for mobile
applications. The country remained as the world’s fastest growing market for Google
Play downloads in Q2 and Q3 of 2018.
Bharti Airtel had plans to launch 6,000 new sites and 2,000 kms of optical fiber in
Gujarat in 2018-19.
Vodafone India and Idea Cellular merged into ‘Vodafone Idea’ to become India’s
largest telecom company in September 2018.
Government Initiatives
The Government has fast-tracked reforms in the telecom sector and continues to be
proactive in providing room for growth for telecom companies. Some of the key initiatives
taken by the Government are as follows:
In January 2020, Government of India allowed 100 per cent FDI in Bharti Airtel.
The Government of India planned to roll out a new National Telecom Policy 2018 in
lieu of rapid technological advancement in the sector over the past few years. The
policy intended to attract investments worth US$ 100 billion in the sector by 2022.
The Department of Information Technology intends to set up over 1 million internet-
enabled common service centres across India as per the National e-Governance Plan.
FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent;
out of 100 per cent, 49 per cent will be done through the automatic route and the
rest will be done through the FIPB approval route.
FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre,
electronic mail and voice mail.
The Government of India has introduced Digital India programme under which all the
sectors such as healthcare, retail, etc. will be connected through internet
