TELECOMMUNICATIONS

August 2023
For updated information, please visit www.ibef.org
Table of Contents

Executive Summary 3

Advantage India 4

Market Overview 6

Recent Trends and Strategies 17

Growth Drivers 24

Opportunities 34

Key Industry Contacts 37

Appendix 39

2
Executive summary

2. RISING PENETRATION RATE 3. SECOND-HIGHEST NUMBER OF

▪ Telecom penetration, also known as tele-
INTERNET USERS
density, has grown rapidly over the last
▪ India has the second-highest number of
few years.
internet subscribers globally.
▪ Tele-density increased from 18.23% in
▪ The total number of internet subscribers
FY16 to 88.17% in FY21.
reached 865.9 million in December 2022.
▪ As of June 2023, tele-density stood at
84.43%.
4. HIGHER INVESTMENT
FROM FOREIGN PLAYERS
▪ India plans to manufacture mobile
1. SECOND-LARGEST phones worth US$ 126 billion by
SUBSCRIBER BASE 2025-26.
▪ In January 2022, Google made a
▪ India has the second-largest telecom US$ 1 billion investment in Airtel
network in the world. through the India Digitization Fund.
▪ In India, the total telephone subscriber ▪ Similarly, global vendors such as
base stood at 1,173.89 million in June Samsung, Cisco, Ciena, Jabil,
2023. 2 3 Foxconn, Sanmina and Flex have
shown interest in setting up
manufacturing in India for telecom
and networking products under the
newly announced PLI scheme.
▪ FDI inflow in the telecom sector
stood at US$ 39.27 billion between
1 4 April 2000-June 2023.

Source: Telecom Regulatory Authority of India (TRAI), News Articles

3
Advantage India

4
Advantage India

2. ATTRACTIVE OPPORTUNITIES 3. POLICY SUPPORT

• India's 5G subscriptions to have 350 million by 2026, accounting for • The Union Cabinet approved Rs. 12,195 crore (US$ 1.65 billion) production-
27% of all mobile subscriptions. linked incentive (PLI) scheme for telecom & networking products under the
• Prime Minister Mr. Narendra Modi launched 5G services on Department of Telecom. On December 2022, 42 companies have committed an
October 1, 2022. investment US$ 502.95 million (Rs. 4,115 crore) comprising 28 MSMEs and 14
• The Government of India has introduced Digital India programme Non-MSMEs (eight domestic and seven global companies) have been approved
where sectors such as healthcare, retail, etc. will be connected under the Production-linked Incentive (PLI) Scheme.
through Internet. • In October 2021, the government notified 100% foreign direct investment (FDI)
• The value of export of mobile phones in FY23 stood at US$ 10.84 via the automatic route from previous 49% in the telecommunications sector.
billion (Rs. 90,000 crore). Moreover, during April-June 2023, • To drive the development of 6G technology, the Department of
electronic goods exports were estimated at US$ 6.89 billion. Telecommunications (DoT) developed a sixth generation (6G) innovation group.
• India ranks 2nd in "international mobile broadband internet traffic"
and "international Internet bandwidth." 4. INCREASING INVESTMENT
• By 2025, India will need ~22 million skilled workers in 5G-centric
• In Union Budget 2023-24 the Department
technologies such as Internet of Things (IoT), Artificial Intelligence
of Telecommunications was allocated Rs.
(AI), robotics and cloud computing.
97,579.05 crore (US$ 11.92 billion). Of
this, US$ 48.88 million (Rs. 400 crore) is
for Research and Development, US$
1. ROBUST DEMAND 611.1 million (Rs. 5,000 crore) is for
• Tele-density of rural subscribers reached Bharatnet.
57.83% in June 2023. • The PLI plan for Large Scale Electronics
• Total volume of wireless data usage
increased by more than 7 folds from
2 3 Manufacturing received about US$ 569.49
million (Rs. 4,700 crore) in investment as
of September 2022.
4206 petabytes in Q1, FY18 to 32397
• India ranks third in "Annual investment in
petabytes in Q1, FY22. telecommunication services" and
• Also, India is one of the "Domestic market size."
biggest consumers of data worldwide. As
per TRAI, the average wireless data 1 4
usage per wireless data subscriber was
17.11 GB per month in December 2022
from 61.66 MB in March 2014.

Source: Economic Times, TRAI, App Annie, Department of Telecommunications, PRS Legislative Research

5
 Market Overview

MARKET OVERVIEW

6
The telecom market split into three segments

Telecom

Mobile (wireless) Fixed-line (wireline) Internet services

▪ Comprises establishments ▪ Consist of companies that ▪ Include Internet Service

operating and maintaining operate and maintain switching Providers (ISPs) that offer
switching and transmission and transmission facilities to broadband internet connections
facilities to provide direct provide direct communication through consumer and
communication via airwaves through landlines, microwave or corporate channels
a combination of landlines and
satellite link-ups

Source: Sutherland Research

7
Expanding telecom subscriber base on the face of government
initiatives

▪ India is currently the second-largest telecommunication market and Growth in total telephone subscribers
has the second-highest number of internet users in the world.

▪ The PLI scheme in telecom and networking products aims to make

India a global hub of manufacturing telecom equipment. It is

1,197.87
estimated that full utilisation of the scheme funds is likely to lead to

1,190.67
incremental production of about Rs. 2.4 lakh crore (US$ 32.01
billion) with exports of ~Rs. 2 lakh crore (US$ 26.67 billion) over five

1,178.41
years.

1,173.89
1,173.83
1,172.44

1,170.38
▪ India’s telephone subscriber base increased to 1,170.75 million in
January 2023 from 1,170.38 billion in December 2022.

▪ In India, the total telephone subscriber base stood at 1,173.89 million

1,151.78
in June 2023.

▪ In India, tele-density (defined as the number of telephone

connections per 100 individuals) stood at 84.43%, as of June 2023.

Dec 16Dec 17Dec 18Dec 19Dec 20Dec-21Dec-22Jun-23

Telephone Subscriber (in million)

Source: Telecom Regulatory Authority of India, News articles

8
Wireless segment and rural subscribers

Share of wireless and wireline segments in telephone

Urban and rural tele-density
subscriptions

2.6% 2.3%

30.3%

June 2023 December 44.3%

June 2023 December
2022 2022 55.7%

69.7%
97.4% 97.7%

Wireless Wireline
Urban Rural

▪ The share of the rural segment in India’s telecommunications market has increased steadily.

▪ The wireless segment accounted for 97.4% of the total telephone subscriptions in June 2023.

Source: Telecom Regulatory Authority of India

9
Wireless subscriptions witness robust growth over the years

Wireless subscriptions (in million)

▪ Wireless subscription has grown robustly over the past few years.

▪ The growth in wireless subscriptions has led to a significant rise in

wireless tele-density.

1,176.00
▪ As of June 2023, the wireless subscribers base stood at 1,143.57

1,167.44
million.

1,154.62
1,153.77
1,151.44
▪ As of June 2023, the wireless subscriber base of Jio stood at 438.58

1,143.93

1,143.57
million, followed by Bharti Airtel (373.72 million), Vodafone Idea

1,127.37
229.65 million, and BSNL (99.47 million).

Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Mar-23 Jun-23

Source: Telecom Regulatory Authority of India

10
Strong growth in broadband drives internet access revenues

▪ Total broadband subscriptions in the country grew from 149.75 Broadband subscriptions (in million)
million in FY16 to 846.57 million in FY23 (April-March).

▪ The number of wired broadband subscriptions stood at 33.49 million

in FY23.

▪ Wireless broadband subscribers stood at 813.08 million in FY23.

▪ As of June 2023, the top five service providers were as follows:

Reliance Jio Infocom Ltd stood at 438.58 million, followed by Bharti
Airtel (241.52 million), Vodafone Idea (124.89 million), and BSNL
(20.93 million).

861.47
846.57
832.20
792.08
747.41
661.94
518.55
362.87
Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Apr-22 Mar-23 Jun-23

Note: * As Of December 2022

Source: Telecom Regulatory Authority of India;

11
Number of internet subscribers increasing at a fast pace

Internet subscription (in million)

▪ In October-December 2022 India’s Internet subscribers reached
865.90 million of which 32.41 million were wired subscribers and
833.49 million were wireless internet subscribers.
900
▪ The number of internet subscribers in the country increased at a
11.73% CAGR from 391.5 million in 2016 to 865.90 million in 2022- 800

23.
700
▪ The number of internet subscribers during FY23 stood at 881.25
600
million.

▪ The number of internet subscribers in the country is expected to 500

reach 900 million by 2025. 881.25
400 834.29 865.90
795.18
▪ India is likely to have 330 million 5G subscribers by 2026. 718.74
300 604.21
▪ India is home to more than 500 million smartphone users and over
445.96
100 million users with 5G-ready smartphones. 200 391.50

▪ Overall IP traffic expected to grow four-fold at a CAGR of 30% by 100

2021.
0
▪ Average wireless data usage per wireless data subscriber was 14.6 2016 2017 2018 2019 2020 2021 2022 2023
GB per month in FY21 and is expected to reach to 40 GB by 2026.

Note: CAGR - Compound Annual Growth Rate; IP - Internet Protocol, 2021: until September 2021
Source: Telecom Regulatory Authority of India, Business Monitor International

12
Exponential growth in data consumption

▪ India holds the distinction of being the largest consumer of mobile Total Wireless Data Usage (in Petabytes)
data globally.

▪ Data consumption in the country has witnessed exponential growth

over the course of the past few years.

▪ The aggregated data consumed as of December 31, 2022, was

40,126 40,512
1,40,24,519 GB.

▪ The total wireless data usage in India grew at a rate of 0.96% from 34,568
40,126 PB in September 2022 to 40,512 PB in December 2022. 32,397

▪ The contribution of 2G, 3G and 4G data usage to the total volume of 27,799
26,405
wireless data usage was at 0.14%, 0.93% and 98.93%. 25,227

Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Sep-22 Dec-22

Note: CAGR - Compound Annual Growth Rate, PB- Petabytes

Source: Telecom Regulatory Authority of India

13
Telecom revenues

▪ The Indian telecom sector’s gross revenue declined from US$ 40.29 Telecom Sector Gross Revenue (US$ billion)
billion in FY16 to US$ 37.36 billion in FY21.

▪ During FY23, the gross revenue from the telecom sector stood at Rs.
3.1 lakh crore (US$ 37.33 billion).

40.93
40.29
▪ Gross revenue of the telecom sector stood at Rs. 88,166 crore (US$

39.49

37.36

37.33
10.68 billion) in the third quarter of FY22.

35.87
33.97
▪ Gross revenue of the telecom sector stood at Rs. 83,767 crore (US$

30.28
10.21 billion) in the second quarter of FY22.

▪ The Indian telecom sector’s revenue grew at 4.16% in FY21 from

FY20 on the back of stabilising tariff wars and increased spending by
subscribers due to minimum recharge plans.

▪ In August 2021, the Department of Telecommunications (DoT)

officials stated that it is working on a package, which includes
reducing the revenue share licence fee to 6% of adjusted gross
revenue (AGR) of the operators from the current 8%. This would be
done by reducing the 5% universal service obligation levy by two
percentage points and providing relief of about Rs. 3,000 crore (US$ FY16 FY17 FY18 FY19 FY20 FY21 FY22** FY23
403.63 million) annually to the operators.

Note: ** - April – December ; CAGR - Compound Annual Growth Rate, FY - Indian Financial Year (April - March),
Source: Telecom Regulatory Authority of India’s Performance Indicator Report

14
Emergence of tower industry

▪ The four operators running the telecom network utilized 7,50,718 towers as of February 2023. Therefore, there had been a nearly 60% increase
and a 40% increase in towers and Base Transceiver Stations (BTS), respectively, since December 2017. The number of Mobile BTS are 23.98
lakh in December 2022.

▪ 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 cost and focus on core operations, telecom companies have been segregating their tower assets into separate companies. For example:
Reliance Communications has decided to finalise 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.

▪ In April 2021, Bharti Airtel Ltd. announced a new corporate structure by forming a new telecom entity to sharpen its focus on digital assets. The
telco has formed a new subsidiary, Airtel Ltd., which will house its telecom business.

▪ In the same month, Dixon Technologies (India) Ltd. partnered with Bharti Enterprises Ltd. to make telecom and networking equipment. Under
the deal, Dixon will make modems, routers, set-top boxes and IoT devices for telecos including Bharti Airtel Ltd.

Source: News Research

15
Key players in the telecom sector

RELIANCE JIO INFOCOMM LIMITED BHARTI AIRTEL LIMITED

Total Broadband Subscribers: 447.75 million Total Broadband Subscribers: 248.06 million

Wireline Subscriber Base: 9.17 million Wireline Subscriber Base: 6.54 million

Market Share of Broadband Services: 51.98% Market Share of Broadband Services: 28.79%

VODAFONE IDEA LIMITED BHARAT SANCHAR NIGAM LIMITED

Total Broadband Subscribers: 124.90 million Total Broadband Subscribers: 24.59 million

Wireline Subscriber Base: 0.68 million Wireline Subscriber Base: 3.66 million

Market Share of Broadband Services: 14.50% Market Share of Broadband Services: 2.85%

Note: Data as of December 2022

16
 Recent Trends and Strategies

RECENT TRENDS AND STRATEGIES

17
Notable trends in the Indian telecom sector… (1/4)

1
Green telecom
• The green telecom concept is aimed at reducing carbon footprint of the telecom industry through lower energy consumption.
• The Government proposed a joint task force between Ministry of New and Renewable Energy (MNRE) and Department of Telecommunication to
promote green technology in the sector.

2
Expansion to rural market
• Dedicated government schemes BharatNet Project Scheme, Telecom Development Plan, Aspirational District Scheme, initiatives in North-Eastern
Region through Comprehensive Telecom Development Plan (CTDP), etc resulted in a 200% increase in rural internet subscriptions between 2015
to 2021.
• Over 62,443 uncovered villages in India will be provided with village telephone facility with subsidy support from the government’s Universal
Service Obligation Fund (thereby increasing rural tele-density).
• Broadband service provider, Excitel, plans to raise Rs. 200 crore (US$ 28.37 million) in funding as it plans to expand FTTH (fibre to the home)
deployment on its network and establish presence in 50 cities by December 2021.

3
Emergence of BWA technologies
• Prime Minister Mr. Narendra Modi launched 5G services on October 1, 2022. As of January 31, 2023, 5G services were launched in 238 cities in
all license service areas.
• BWA technologies, such as WiMAX and LTE, is among the most recent and significant developments in wireless communication.
• India is expected to be the second-largest market in 5G services followed by China in the next 10 years.

4
Commercial SMS traffic
• Due to higher post-pandemic digital adoption, daily commercial SMS traffic in India, currently, has increased by ~20%, even as overall text
messaging continues to shrink. At present, ~1.3 billion commercial SMSs are sent every day.
Notes: BWA - Broadband Wireless Access, TRAI - Telecom Regulatory Authority of India
Source: News Articles

18
Notable trends in the Indian telecom sector… (2/4)

5
Internet of Things (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 will play a vital role in development of those cities.
• Reliance Jio has partnered with Samsung Electronics to set up a nationwide IoT network.

6
Public Wi-Fi Networks
• RailTel, a mini Ratna PSU launched Prime Minister Wi-Fi Access Network Interface (PM-WANI) to access its Public WiFi services across 100
railway stations having 2,384 WiFi hotspots in 22 states.
• In December 2020, the Union Cabinet, chaired by the Prime Minister, Mr. Narendra Modi, approved a proposal by Department of
Telecommunications for setting up of Public Wi-Fi Networks by Public Data Office Aggregators (PDOAs) to provide public Wi-Fi services through
Public Data Offices (PDOs).

7
Universal Service Obligation Fund
• USOF officially launched Telecom Technology Development Fund (TTDF) Scheme on October 1, 2022
• In December 2020, the Union Cabinet, chaired by the Prime Minister, Mr. Narendra Modi, approved the provision for a ‘Universal Service
Obligation Fund (USOF)’ scheme to provide mobile coverage in Arunachal Pradesh and two districts of Assam, namely KarbiAnglong and Dima
Hasao, under the Comprehensive Telecom Development Plan (CTDP) for the North Eastern Region (NER).

8
Satellite-based Narrowband-IoT Network
• In December 2020, BSNL, in partnership with Skylotech India, announced a breakthrough in satellite-based NB-IoT (Narrowband-Internet of
Things) for fishermen, farmers, construction, mining and logistics enterprises.
Source: Press Information Bureau

19
Notable trends in the Indian telecom sector… (3/4)

9
Investment in optical fibre network
• With the launch of 5G, telecommunication companies are expected to invest US$ 2.5 billion on optical fibers.
• In January 2020, HFCL Limited, formerly known as Himachal Futuristic Communications, supplied indigenously designed, developed and
manufactured 100,000 Wi-Fi systems in a record time, and stated that Wi-Fi Access Network Interface (WANI) with the government’s ambitious
BharatNet initiative would augment broadband uptake in rural India. Reliance Jio Infocomm is going to expand its optical fibre network to over
1,100 cities under its Jio GigaFiber brand
• On September 21, 2020, Prime Minister, Mr. Narendra Modi launched a project to connect all 45,945 villages in Bihar with optical fibre internet
service

10
Consumer spending
• In the first quarter of FY21, customer spending on telecom services increased 16.6% y-o-y, with over three-fourths spent on data services. This
spike in consumer spending came despite of the COVID-19 disruption and lack of access of offline recharges for a few weeks

11
Rising investment
• As of March 2023, Jio partnered with EESL to provide 1 million smart prepaid meters in Bihar.
• As of March 2023, the PLI scheme for Large-Scale Electronics Manufacturing (LSEM) attracted investment of US$ 726.77 million (Rs. 5,998
crore) and led to a total production of US$ 33.55 billion (Rs. 2,76,903 crore), including exports of US$ 15.61 billion (Rs. 1,28,886 crore).
• In May 2023, STT GDC invested US$ 242.33 million (Rs. 2,000 crore) in two more data centres in Pune.
• In Q1 of FY22, the Indian technology, media and telecom (TMT) sector leads the M&A market in India bagging deals worth US$ 11.5 billion.
• In August 2022, the Government of India received investments worth Rs. 1,50,173 crore (US$ 18.83 billion) for its 5G spectrum.

Source: ’Searching for New Frontiers of growth: Indian Banks’- PwC, Reserve Bank of India, Press Information Bureau, News Articles

20
Notable trends in the Indian telecom sector… (4/4)

12
Consolidation
• Vodafone India and Idea have merged into Vodafone idea. Vodafone Idea unified assets and completed network integration in June 2020.

13
Mobile banking
• Department of Posts launched mobile banking for its saving account customers.
• As of July 2023, 473 banks were live on unified payment interface (UPI).

14
Digital experience
• In March 2021, Vodafone Idea Ltd. (VIL) announced that the acquired spectrum in five circles would help improve 4G coverage and bandwidth,
allowing it to offer ‘superior digital experience’ to customers.

15
Partnership
• Vodafone Idea has partnered with Indian Council for Research on International Economic Relations (ICRIER) called InViCT to set up a telecom
Centre of Excellence.
• In August 2021, Tata Group company Nelco announced that the company talked with Canadian firm Telesat to sign a commercial pact for
launching fast satellite broadband services in India under the latter’s Lightspeed brand, a move which would pit the combined entity against Bharti
Enterprises-backed OneWeb, Elon Musk’s SpaceX and Amazon.
• In March 2021, Advanced Television Systems Committee (ATSC) and Telecommunications Standards Development Society, India (TSDSI)
signed a deal to boost adoption of ATSC standards in India in order to make broadcast services available on mobile devices. This allows the
TSDSI to follow ATSC standards, fostering global digital broadcasting standard harmonisation.
Source: News Articles

21
Strategies adopted

1 2 3 4

MARKETING STRATEGY DIFFERENTIATION REDUCED NUMBER OF PRICING STRATEGY

▪ Players are using innovative ▪ Players differentiate themselves PLANS ▪ Player's price their products
marketing strategies to by providing different services to very carefully due to the price
▪ Players have reduced the
succeed in this sector. customers. sensitive nature of customers
number of plans on offer
▪ Vodafone Idea launched and high competition in the
▪ Bharti Airtel has already and now offer a limited
#StrongerEveryHour with an sector.
partnered with Amazon Prime number of simple tariff plans
aim to highlight the improved and Hotstar and is expected to along with marquee plans.
network of Vodafone tie up with Netflix to offer free ▪ This has simplified choosing
SuperNet 4G - India’s Data subscription to Netflix’s content plans for customers as they
Strong Network. for its mobile customers. can choose the best deals
▪ Airtel launched a new ad for themselves.
campaign ‘Sab Kuch Try ▪ In September 2020, Reliance Jio
Karo, Fir Sahi Chuno’ and partnered with 22 foreign airlines
rolled out a new campaign for inflight internet connectivity
'Open to Questions’, with plans starting at Rs. 499
highlighting its aim to resolve (US$ 6.76) per day.
every single customer query, ▪ In September 2020, Airtel and
learn quickly from failures and Radware partnered to offer cloud
ensure these are not security services to businesses
repeated. in India.
Notes: CDMA - Code Division Multiple Access, GSM - Global System for Mobile Communication
Source: Company website and News Articles

22
Key companies in the market

Company Ownership Presence

Government (56.25%), Life Insurance Fixed-line and mobile telephony (in

Mahanagar Telephone Nigam Ltd (MTNL)
Corporation (18.8%) Delhi and Mumbai), data and Internet

Fixed-line and mobile telephony (GSM -

Government
Bharat Sanchar Nigam Ltd (BSNL) outside Delhi and Mumbai), data and
(100%)
Internet in 22 circles

Bharti Group (45.48%), Pastel Ltd

Broadband and mobile (GSM) in
Bharti Airtel (14.79%), Indian Continent
22 circles
Investment (6.65%),

Aditya Birla Group and Vodafone Broadband and mobile (GSM) in

Vodafone Idea Limited
Group partnership 22 circles

Broadband and mobile in

Reliance Jio Infocomm Reliance Industries Limited.
22 circles

Source: Companies’ website, Moneycontrol

23
 Growth Drivers

GROWTH DRIVERS

24
Sector benefits from rising income, growing young
population

Growing demand Policy support Increasing investment

Higher real
Reduction in
income and Higher FDI inflow
license fee
changing lifestyles

Inviting Resulting in

Growing young Relaxed Increasing M&A

population FDI norms activity

Encouraging
Increasing MoU
firms to expand
and data usage
to rural areas

Note: FDI - Foreign Direct Investment, MOU - Minutes of Use per month and per subscriber, M&A - Mergers and Acquisitions

25
Rising income and growing rural market fuels demand for
telecom services

Indian residents shifting from low to high income groups (%)

GDP per capita at current prices* (US$)
Million Household, 100%^

3,500 100%
44.0% 31.0% 30.7% 27.6% 18.0%
90%

3,273.85
3,000
80%

3,006.54
46.0%

2,762.31
2,500 70%
46.0%

2,538.82
60% 45.0% 45.3%
2,334.14

2,000 50%
2,134.75

42.0%
1,982.70

40%
1,749.16

1,500
30% 20.0%
20% 15.0% 16.2%
1,000 15.0%
10% 8.0% 11.0%
3.0% 1.5%6.0% 2.0%
6.4% 7.3%
500 0% 2.6% 5.0%
2.9%
2005 2016 2017 2018 2025F
0 Elite(>US$ 30800) Affluent(US$ 15400-30800)
2016

2017

2018

2019

2020

2021

2022

2023
Aspirers(US$ 7700-15400) Next billion(US$ 2300-7700)
Strugglers(<US$ 2300)

▪ Incomes have risen at a brisk pace in India and will continue rising given the country’s strong economic growth prospects.

▪ GDP per capita of India grew at a CAGR of 7.47% from US$ 1,481.56 in 2012 to US$ 3,273.85 in 2023.

▪ Increasing income has been a key determinant of demand growth in the telecommunication sector in India.

▪ 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 the demand for smart phones).
Notes: CAGR - Compound Annual Growth Rate, *Estimates after 2013, ^Data for 2005, 2006 and 2025 is from BCG’s The New Indian: The Many Facets of a Changing Consumer, for 2017
from IBM-Kalaari Capital’s Imagining a Trillion Dollar Digital India and for 2018 from Redseer Consulting’s Indian Habit of Being Healthy
Source: IMF World Economic Outlook Database April 2018

26
Strong Policy Support Crucial To The Sector’s Development… (1/4)

1
To compensate the consumers in case of call drop
• In August 2017, TRAI directed operators to have a call-drop rate of not greater than 2%.
• The policy measures of TRAI have had a positive impact. Call-drops in the country decreased from 0.94% in 2016 to 0.52% in March 2018.

2
Standards of quality wireline and wireless services
• The government plans to update extant regulatory framework with the Indian Telecommunication Bill, 2022.
• In 2015, TRAI made regulations to amend the standards of quality of wireline (telephone service) and cellular mobile telephone services. These
regulations has been laid down to ensure effective compliance with the quality-of-service regulations and to protect the interest of the customers.

3
Relaxed FDI norms
• FDI in telecom sector has been increased to 100% from 74%.
• In October 2021, the government notified 100% foreign direct investment (FDI) via the automatic route from previous 49% in the
telecommunications sector.
• FDI of up to 100% is permitted for infrastructure providers offering dark fibre, electronic mail and voice mail.

4
Telecommunication tariff order
• In February 2018, TRAI passed the Telecommunication Tariff (63rd amendment) order, according to which, telecom firms are free to give
promotional offers to customers if the offers are transparent, non-predatory and non-discriminatory.
• The Telecom Regulatory Authority of India (TRAI) has issued a Telecom Tariff (69th amendment) Order 2022 on “Tariff for SMS and Cell
Broadcast alerts disseminated through Common Alerting Protocol (CAP) platform during disasters/non-disasters”. Department of Telecom (DoT)
has requested TRAI to provide tariff for SMS and Cell Broadcast alerts/messages to be disseminated by TSPs through the CAP platform during
disasters/non-disasters.
Notes: FDI - Foreign Direct Investment, FIPB - Foreign Investment Promotion Boar
Source: TRAI, News Articles

27
Strong Policy Support Crucial To The Sector’s Development… (2/4)

5
International Tie-ups
• On January 15, 2021, India and Japan signed an MoU to enhance cooperation in the field of Information and Communications Technologies. The
MoU was signed between the Union Minister for Communications, Electronics and IT, Ravi Shankar Prasad, and the Japanese Minister for Internal
Affairs and Communications, Takeda Ryota.
• In October 2021, British satellite operator Inmarsat Holdings Ltd. announced that it is the first foreign operator to get India’s approval to sell high-
speed broadband to planes and shipping vessels. Inmarsat will access the market via Bharat Sanchar Nigam Ltd. (BSNL) after BSNL received a
license from the Department of Telecommunications.

6
Financial support
• In August 2021, the Department of Telecommunications (DoT) initiated discussions with banks to address financial stress in the telecom sector,
particularly Vodafone Idea Ltd. (VIL) that urgently requires fund infusion to stay afloat.
• The USOF (Universal Service Obligation Fund)is expected to extend financial support to operators providing services in rural areas and
encourage active infrastructure sharing among operators.

7
Set up internet connections
• 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.
• On August 8, 2016, TRAI made the 10th amendment to the TCPR (Telecom Consumers Protection Regulations) permitting telecom companies to
offer data packs having maximum validity of 365 days.

Source: TRAI, News Articles

28
Strong Policy Support Crucial To The Sector’s Development… (3/4)

8
Indian Mobile Congress
• On December 8, 2020, Prime Minister Mr. Narendra Modi inaugurated and addressed the virtual edition of the India Mobile Congress (IMC) 2020.
• The objective of IMC 2020 was to align with the Prime Minister’s vision to promote ‘Aatmanirbhar Bharat’, ‘Digital Inclusivity’ and ‘Sustainable
development, entrepreneurship & innovation’ and drive foreign and local investments, encourage R&D in the telecom and emerging technology
sectors.

9
Enhanced spectrum limit
• The prescribed limit on spectrum will be increased from 6.2 MHz to 2x8 MHz (paired spectrum) for GSM technology in all areas other than Delhi
and Mumbai, where it will be 2x10 MHz (paired spectrum).
• Telecom players can, however, obtain additional frequency. there will be an auction of spectrum subject to the limits prescribed for the merger of
licenses.
• On January 6, 2021, the Department of Telecommunications (DoT) issued Notice Inviting Applications (NIA) for auction of Spectrum in 700 MHz,
800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz bands. Last date for submission of applications for participation in the
auction marked at February 5, 2021, and auction to commence online from March 1, 2021.

10
Quantum Communication Lab
• In October 2021, Telecom Secretary Mr. K. Rajaraman inaugurated the Quantum Communication Lab at the Centre for Development of
Telematics (C-DOT), Delhi, and unveiled the indigenously developed Quantum Key Distribution (QKD) solution by C-DOT. QKD can support a
distance of >100 kms on standard optical fibre.
• Development of the QKD solution is likely to address the threat posed by rapid advancement in quantum computing to the security of data being
transported by the current communication infrastructure.

Source: TRAI, News Articles

29
Strong Policy Support Crucial To The Sector’s Development… (4/4)

11
Make in India
• Government of India announced the Phased Manufacturing Programme (PMP) to promote domestic production of mobile handsets. This initiative
will help in building a robust indigenous mobile manufacturing ecosystem in India and incentivise large scale manufacturing.
• In January 2020, HFCL Limited, formerly known as Himachal Futuristic Communications, supplied indigenously designed, developed and
manufactured 100,000 Wi-Fi systems in a record time, and stated that Wi-Fi Access Network Interface (WANI) with the government’s ambitious
BharatNet initiative would augment broadband uptake in rural India.
• In March 2020, the Government approved the production-linked incentive (PLI) scheme for Large Scale Electronics Manufacturing. The scheme
proposes production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified
electronic components including Assembly, Testing, Marking and Packaging (ATMP) units..

12
BharatNet Project: Tender Invited for Public Private Partnership
• Up to July 2022, 584,747 km length of Open Fiber Control (OFC) was laid connecting 187,245 Gram Panchayats. In 181,888 Gram Panchayats
the service is ready on fiber and satellite.
• In July 2021, Bharat Broadband Network Limited (BBNL), on behalf of the Department of Telecommunications, invited global tender for the
development of the Public Private Partnership model in 9 separate packages across 16 states for a concession period of 30 years. Under this
project, the government through BharatNet provided a maximum grant of Rs. 19,041 crore (US$ 2.56 billion) as viability gap funding.
• The project will cover ~3.61 lakh villages (including gram panchayats) across Kerala, Karnataka, Rajasthan, Himachal Pradesh, Punjab, Haryana,
Uttar Pradesh, Madhya Pradesh, West Bengal, Assam, Meghalaya, Manipur, Mizoram, Tripura, Nagaland and Arunachal Pradesh.
• As of February 2022, BharatNet conneted 171, 000 blocks and a total of 5,000 terabytes of data was consumed every month.

13
Other Reforms
• In September 2021, the Indian government approved structural and process reforms in the telecom sector to protect and generate employment
opportunities, promote healthy competition, protect interests of consumers, encourage investments and reduce regulatory burden on telecom
service providers.

Source: TRAI, News Articles

30
National digital communications policy - 2018

National Digital
Communications Policy,
2018

Connect India Propel India Secure India

▪ Provide universal broadband ▪ Attract investment worth US$ 100 ▪ Establish a comprehensive data
connectivity at 50 Mbps to every billion in digital communications protection regime for digital
citizen sector communications
▪ Provide 1 Gbps connectivity to all ▪ Increase India’s contribution to ▪ Ensure net neutrality principles are
Gram Panchayats of India by 2020 global value chain upheld
and 10 Gbps by 2022
▪ Creation of innovation led start-ups ▪ Develop and deploy robust digital
▪ Enable fixed line broadband access in digital communications sector communication network security
to 50% of households frameworks
▪ Train/ re-skill 1 million manpower
▪ Achieve ‘unique mobile subscriber for building new age skills ▪ Build capacity for security testing
density’ of 55 by 2020 and 65 by and establish appropriate security
▪ Accelerate transition to Industry 4.0
2022 standards
▪ Ensure connectivity to all ▪ Address security issues relating to
uncovered areas encryption and security clearances

Note: Mbps - Mega bits per second, Gbps - Giga bits per second
Source: National Digital Communications Policy, 2018

31
Foreign investment flowing in… (1/2)

▪ FDI inflow in the telecom sector stood at US$ 39.27 billion between FDI inflows in telecommunication from April 2000-September
April 2000-June 2023. 2022 (US$ billion)

▪ FDI equity inflow was estimated at US$ 696 million during April – 40.00 0.67 0.39 39.02
4.45 0.39
December 2022 as compared to US$ 668 million last year during the
same period. 35.00
2.66
▪ In the same period, FDI inflow in the sector accounted for ~6.94%
6.21
share of the total FDI inflows in the country. 30.00

▪ Most large players see the PLI scheme in telecom and networking
25.00 5.56
products as a growth opportunity. In April 2021, the government pointed
out that firms such as Ericsson and Nokia are eager to expand their 1.32
operations in India and global companies such as Samsung, Cisco, 20.00 2.90
Ciena and Foxconn have expressed interest to set up their 1.31
0.30
manufacturing base in the country for telecom and networking products. 1.96
15.00 0.72
▪ The PLI scheme expected to bring in investments of about Rs. 3,000
crore (US$ 400.08 million) and generate huge direct and indirect
10.00
employment.

▪ On October 14, 2021, 31 companies comprising 16 MSMEs and 15 5.00

FY14

FY21
FY12

FY13

FY15

FY16

FY17

FY18

FY19

FY20

FY22

FY01-FY23*
FY01-FY11

FY23*
Non-MSMEs (eight domestic and seven global companies) have
been approved under the Production-linked Incentive (PLI) Scheme.

▪ In October 2021, Dixon Technologies announced plans to invest Rs.

200 crore (US$ 26.69 million) under the telecom PLI scheme; this
investment included the acquisition cost of Bharti Group’s
manufacturing unit.
▪ In January 2022, Google made a US$ 1 billion investment in Airtel
through the India Digitization Fund.
Source: Department for Promotion of Industry and Internal Trade (DPIIT)

32
Foreign investment flowing in … (2/2)

▪ Vodafone India and Idea Cellular merged into ‘Vodafone Idea’ to become India’s largest telecom company as of September 2018.
Foreign investment in India

Target Acquirer Acquisition price (US$ million) Division acquired

Bharti Airtel
Aqilliz NA 10%

Bharti Airtel
Google International 700 1.28%

ValueFirst Twilio NA 100% stake

Bharti Airtel Singtel (as of February 2019) 367.15 Increase in stake to 48.90%

Bharti Airtel Singtel (2018) 411.02 Increase in stake to 27.08%

Ascend Telecom
IDFC Alternatives (2017) 54.29 33% stake
Infrastructure Pvt. Ltd.
Telenor Bharti Airtel (2017) N/A Infrastructure and Contracts
Bharti Airtel's operations in
Orange SA (2016) 900 100% stake
Burkina Faso and Sierra Leone
MTS Reliance Communication (2015) 736.98 8 - 10% stake
Augere Wireless Bharti Airtel (2015) 21.3 100% stake

Bharti Airtel Singtel (2013) 302 Increases stake to 32.34%

Bharti Airtel Qatar Foundation Endowment(2014) 1,260 PE deal - 5% stake

Vodafone International Holdings
Vodafone India Ltd 1,641 Increases stake to 100%
(2014)
Ascend Telecom Ascend Telecom Infrastructure Pvt Ltd 54.29 33% stake

Notes: M&A - Merger and Acquisition, PE - Private Equity

Source: Thomson Banker, Deal Tracker, Grant Thornton

33
 Opportunities

OPPORTUNITIES

34
Opportunities across segments in the industry

7. Growing Cashless
1. Increasing mobile subscribers
• India is the second-largest smartphone
Transactions
market in the world. India’s mobile • In order to overcome the cash related
subscriber base is expected to reach
1,420 million by 2024 from 1,200 million in
1 7 problems being faced by people, due to
demonetisation, Paytm launched a
2018. service through which consumers and
• By 2022, the 4G user base was expected merchants can pay and receive money
to reach 820 million.
2 •
instantly, without an internet connection.
Payments on unified payments interface
(UPI) hit an all-time high of 97.88
2. Untapped rural markets
• Tele-density of rural subscribers 6 million (by volume), with transactions
worth ~Rs. 12.98 trillion (US$ 157.85
reached 57.46% in March 2022. billion) in January 2023.

3 6 .Telecom advertising
3. Rising internet
penetration
5 market
• Internet penetration is expected to
grow steadily and is likely to be
4 • According to a Zenith Media survey, India
is expected to become the fastest-
bolstered by Government policy. growing telecom advertisement market,
• Number of broadband subscribers with an annual growth rate of 11%
reached 846.57 million in March between 2020 and 2023.
2023.
• To encourage cash economy, 4. Development of telecom
Indian Government announced to
provide free Wi-Fi to more than
infrastructure 5. Growth in MVAS
1,000 gram panchayats. • TRAI has made several recommendations for • Indian Mobile Value-Added Services (MVAS)
the development of telecom infrastructure, industry was expected to grow at a CAGR of
including tax benefits and recognising telecom 18.3% during the forecast period of 2015-2020
infrastructure as essential infrastructure. and reach US$ 23.8 billion by the end of 2020.

Source: KPMG, TRAI, Press Information Bureau, Government of India, NPCI

35
Mobile application market: fast-growing segment

▪ India was the second-largest market for Google Play in 2019 and App downloads^ in India (in billion)
was estimated to grow at a compound annual growth rate (CAGR) of
11% between 2018 to 2022.

▪ The Government of India intends to establish one hundred labs for 30.00
creating applications using 5G services in engineering universities as

28.00
part of the Union Budget 2023, in order to realize a new range of
25.00
possibilities, business models, and job potential.

▪ Indians downloaded over 28 billion apps on their mobiles in 2022

and accounted for 5% of the 625 billion downloads globally. 20.00

19.00
▪ In 2020, India accounted for 14% of the global app installs.

18.11
▪ App downloads in the country increased from 12.07 billion in 2017 to 15.00
19.00 billion in 2019.

12.07
▪ Indian users spent around US$ 370 million through app stores in 10.00
2019.

▪ The segment’s growth is expected to be driven by increasing mobile

6.51
5.00
connections and availability of low-range smartphones.

▪ Over 100 million apps are downloaded every month across different
platforms such as iOS and Android. 0.00

2016

2017

2018

2019

2022
Notes: F - Forecast, *As per latest data available, ^Combined iOS App Store, Google Play and third-party android, Q1- Jan to March
Source: Gartner, Deloitte, Assorted News Articles, App Annie

36
Key Industry Contacts

37
Key industry contacts

Agency Contact Information

Address: B-601, Gauri Sadan 5, Hailey Road, New Delhi - 110 001,
Association of Unified
India
Telecom Service Providers
Tel: 91 11 23358585
of India (AUSPI)
Fax: 91 11 23327397
Website: http://www.auspi.in/

Address: UGF-74, World Trade Centre, Babar Road, Connaught Place,

New Delhi-110 001
Association of Competitive
Tel.: 91-11- 43565353/ 43575353/ 9899242273
Telecom Operators (ACTO)
Fax: 91 11 43515353
E-mail: info@acto.in, tapan@acto.in
Website: www.acto.in

Address: 232-B, Ground Floor, Okhla Industrial Estate, Phase III, New
Delhi 110020
Internet and Mobile
Tel: 91 11 46570328
Association of India (IAMAI)
E-mail: kalyan@iamai.in
Website: www.iamai.in

Address: 14, Bhai Vir Singh Marg, Sector 4, Gole Market, New Delhi -
Cellular Operators Association 110001, India
of India Tel: 91 11 2334 9275
E-mail: contact@coai.in
Website: www.coai.com

38
Appendix

39
Glossary
• BWA: Broadband Wireless Access

• CAGR: Compound Annual growth rate

• DoT: Department of Telecommunication

• FDI: Foreign Direct Investment

• FTTH: Fibre To The Home

• FY: Indian Financial Year (April to March)

• IMF: International Monetary Fund

• Rs.: Indian Rupee

• IPTV: Internet Protocol Television

• M&A: Mergers and Acquisitions

• MoU: Minutes of Use per month and per subscriber

• MPEG: Moving Picture Experts Group

• OFC: Optical Fibre Cable

• TRAI: Telecom Regulatory Authority of India

• USOF: Universal Service Obligation Fund

• US$: US Dollar

• VAS: Value-Added Services

• WiMAX: Worldwide Interoperability for Microwave access telecommunications

Wherever applicable, numbers have been rounded off to the nearest whole number

40
Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$
2004-05 44.95 2005 44.11
2005-06 44.28 2006 45.33
2006-07 45.29 2007 41.29
2007-08 40.24 2008 43.42
2008-09 45.91 2009 48.35
2009-10 47.42 2010 45.74
2010-11 45.58 2011 46.67
2011-12 47.95 2012 53.49
2012-13 54.45 2013 58.63
2013-14 60.50 2014 61.03
2014-15 61.15 2015 64.15
2015-16 65.46 2016 67.21
2016-17 67.09 2017 65.12
2017-18 64.45 2018 68.36
2018-19 69.89 2019 69.89
2019-20 70.49 2020 74.18
2020-21 73.20 2021 73.93
2021-22 74.42 2022 79.82
2022-23 78.60 2023* 82.54

Note: *- Until August 2023

Source: Foreign Exchange Dealers’ Association of India

41
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42