Telecom Industry in India

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
past decade and half.
• The Indian mobile economy is growing rapidly and
will contribute substantially to India’s Gross Domestic
Product (GDP), according to report prepared by GSM
Association (GSMA) in collaboration with the Boston
Consulting Group (BCG).
• As of January 2019, India has witnessed a 165 per
cent growth in app downloads in the past two years.
 Introduction
• 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 has made the sector one of the fastest
growing and a top five employment opportunity
generator in the country.
 Introduction
Market Size
• With 604.21 million internet subscribers, as of December 2018,
India ranks as the world’s second largest market in terms of
total internet users.
• Further, India is also the world’s second largest
telecommunications market, with total subscriber base of
1,183.51 million at the end of March 2019
• Moreover, in 2017, India surpassed USA to become the second
largest market in terms of number of app downloads. The
country remained as the world’s fastest growing market for
Google Play downloads in the second and third quarter of 2018.
• 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.
 Introduction
Investment/Major development
• With daily increasing subscriber base, there have been a lot of investments
and developments in the sector. FDI inflows into the telecom sector during
April 2000 – March 2019 totalled to US$ 32.82 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:
• During the first quarter of 2018, 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 the second and third quarter of
2018.               
• Bharti Airtel is planning to launch 6,000 new sites and 2,000 km of optical
fiber in Gujarat in 2018-19.
• The number of mobile wallet transaction increased 5 per cent month-on-
month to 325.28 million in July 2018.
• As of June 2018, BSNL is expected to launch its 5G services by 2020.
• Vodafone India and Idea Cellular have merged into ‘Vodafone Idea’ to
become India’s largest telecom company, as of September 2018.
 Introduction
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
other major initiatives taken by the government are as follows:
• 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. The policy has envisaged attracting 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 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
 Introduction
Achievements
• Following are the achievements of the government in the past four
years:
• Department of Telecommunication launched ‘Tarang Sanchar’ - a web
portal sharing information on mobile towers and EMF Emission
Compliances.
• Six-fold increase in Government spending on telecommunications
infrastructure and services in the country – from Rs 9,900 crores (US$
1.41 billion) during 2009-14 to Rs 60,000 crores (US$ 8.55 billion)
(actual + planned) during 2014-19.
• Over 75 per cent increase in internet coverage – from 251 million users
to 446 million
• Country-wide Optical Fibre Cable (OFC) coverage doubled – from
700,000 km to 1.4 million km
• Five-fold jump in FDI inflows in the Telecom Sector – from US$ 1.3
Billion in 2015-16 to US$ 6.1 billion in 2017-18 (up to December 2017)
 Introduction
Road Ahead
• Revenues from the telecom equipment sector are expected to grow to
US$ 26.38 billion by 2020.
• The number of internet subscribers in the country is expected to double
by 2021 to 829 million and overall IP traffic is expected to grow 4-fold at
a CAGR of 30 per cent by 2021.
• The Indian Government is planning to develop 100 smart city projects,
where IoT would play a vital role in development of those cities.
• The National Digital Communications Policy 2018 has envisaged
attracting investments worth US$ 100 billion in the telecommunications
sector by 2022. T
• he Indian Mobile Value-Added Services (MVAS) industry is expected to
grow at a CAGR of 18.3 per cent during the forecast period 2015–2020
and reach US$ 23.8 billion by 2020.
• App downloads in India are expected to increase to 18.11 billion in
2018F and 37.21 billion in 2022F.
 ADVANTAGE INDIA
 India ranks second in terms of number of  In the era of 5G, telecom will earn 70 per cent of its revenue from
telecommunication subscriptions, internet core beneficiaries of 5G. Currently it is earning 30 per cent from
enterprises.
subscribers and app downloads* globally.
 The government of India has introduced Digital India
 Moreover, India is also one of the largest data
programme under which all the sectors such as healthcare,
consumers globally. It has highest data usage retail, etc. will be connected through internet.
per smartphone at an average of 9.8GB per
month.  For domestic consumption and exports,
 India's internet users is expected to reach 627 Ericsson will start manufacturing of 5G radio
products in India.
million in 2019.

ADVANTAGE
 The government has been proactive in its
INDIA efforts to transform India into a global
 Telecommunication ratings in the country are telecommunication hub.
expected to start rising within the next two  The Government of India unveiled the
quarters (Q3 and Q4 2018-19), providing National Digital Communications Policy,
higher pricing power to incumbent players. 2018 in September 2018. The policy aims
to attract US$ 100 billion worth of
investments and generate 4 million jobs in
the sector by 2022.

 As of January 2019, expenditure on telecom

infrastructure and services by Government of India grew
six-fold to Rs 60,000 crore (US$ 8.31 billion) between
2014-19.
Notes: *Combined iOS App Store, Google Play and third-party android, ^Nokia MBiT Index 2018, PB- Petabytes
Source: Economic Times, TRAI, App Annie, Department of Telecommunications

5 Telecommunication For updated information, please visit www.ibef.org

Chronological growth in Telecom industry

Telecom Industry in India

 THE TELECOM MARKET SPLIT INTO THREE SEGMENTS

Telecom

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

 Comprises  Consists of companies  Includes Internet Service

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

Source: TechSci Research

1 Telecommunication For updated information, please visit www.ibef.org

 TELECOM SUBSCRIBER BASE EXPANDS SUBSTANTIALLY

 India is currently the second largest telecommunication market and Growth

Visakhapatnam
in total subscribers
port traffic (million
and tele-density
tonnes)
has the second highest number of internet users in the world.
 India’s telephone subscriber base expanded at a CAGR of 15.69 per
1,400 100
cent, reaching 1,183.51 million during FY07–19. 92.98 92.84 90.23
90.11
83.36 90
 Tele-density (defined as the number of telephone connections for 1,200 79.38

1,206.22
every 100 individuals) in India, increased from 18.3 per cent in FY07 78.66

1,194.58
80

1,183.51
1186.63
75.23
to 90.11 per cent in FY19. 70.89
1,000

1,058.86
73.32 70

996.49
 Total telephone subscriber base and tele-density reached 1189.28

951.34

933.00
million and 90.23 per cent, respectively, at the end of July 2019. 60

898.02
800 52.74

846.32
50
600 36.98
40

621.28
26.22
400 30

429.72
18.23
20

300.49
200

205.86
10

0 0

FY07
FY08

FY09

FY10

FY12

FY13

FY14

FY15
FY11
Telephone Subscriber (in million) Teledensity

Note: CAGR - Compound Annual Growth Rate

Source: Telecom Regulatory Authority of India

14 Telecommunication For updated information, please visit www.ibef.org

 WIRELESS AND RURAL SEGMENTS
GAINING SHARE
Wireless and Wireline share in telephone subscriptions Urban
Visakhapatnam
and Rural share
portintraffic
telephone
(million
subscriptions
tonnes)

4.10% 1.83%

33.35% 42.98%

FY20
FY11 FY19 FY11 (as on
July’19)

95.90% 98.17% 66.65% 57.01%

Wireless Wireline Urban Rural

 The share of the wireless segment in India’s telecommunications market has increased steadily.

 As of March 2019, the wireless segment comprises 98.17 per cent and in June 2019 it reached 98.2 per cent of telephone subscriptions,
compared to 95.90 per cent in FY11.
 Similarly, share of rural subscribers in total telephone subscribers has surged as telecommunications penetration has increased.

 As of June 2019, rural subscribers form 56.68 per cent of total telephone subscribers, compared to 33.35 per cent in FY11.

Source: Telecom Regulatory Authority of India

15 Telecommunication For updated information, please visit www.ibef.org

WIRELESS SUBSCRIPTIONS WITNESS ROBUST GROWTH OVER THE YEARS

 Wireless subscriptions have grown robustly over the past few years. Visakhapatnam
Wireless Subscription
port traffic (million
(in Million)
tonnes)
 Between FY07-19, wireless subscriptions in the country increased at
a CAGR of 17.66 per cent to 1,165.46 million. ^CAGR 17.66%
1,300 100
 The growth in wireless subscriptions has led to a significant rise in 92.98 92.84
1,200 83.36 90.1188.5
90
wireless tele-density.

1,183.41
1,100 79.38

1,170.18

1,165.46
1,161.81
78.66 75.23 80
 Wireless tele-density of India has increased more than five-fold from 1,000
70.89

1,033.63
18.23 per cent in FY07 to 88.50 per cent as on June 2019. 900 73.32 70

969.89
919.17

904.51
800

867.80
 At the end of June 2019, wireless subscriptions stood at 1165.46 52.74 60

811.59
million while wireless tele-density reached 88.50 per cent. 700
50
600 36.98
40

584.32
500
26.22
400 30

391.76
300 18.23 20
200

261.07
10
100

FY07 165.11
0 0

FY08

FY10

FY13

FY15
FY09

FY12

FY14

FY16
FY11
Note: CAGR - Compound Annual Growth Rate, ^CAGR is up to FY18
Source: Telecom Regulatory Authority of India

16 Telecommunication For updated information, please visit www.ibef.org

STRONG GROWTH IN BROADBAND DRIVES INTERNET
ACCESS REVENUES
 Total broadband subscriptions in the country increased at a CAGR of Visakhapatnam
Broadband Subscriptions
port traffic (million
(in million)
tonnes)
57.93 per cent during FY07–19 to reach 503.31
million. Subscriptions stood at 594.59 million, as of June 2019.
^CAGR 57.93%
 The number of wired broadband subscriptions stood at 18.42 million, 700
at the end of June 2019.
 Wireless broadband subscribers# stood at 576.17 million, at the end 600

604.12
of June 2019.

563.31
500

400

412.60
300

276.52
200

149.75
100

99.20
60.8

FY20…
0
FY07

FY12

FY13

FY15

FY17

FY18
FY08

FY09

FY10

FY14

FY16

FY19
FY11
Note: CAGR - Compound Annual Growth Rate, ^CAGR is up to FY18, #Includes Mobile devices users and Fixed wireless subscribers
Source: Telecom Regulatory Authority of India;

17 Telecommunication For updated information, please visit www.ibef.org

NUMBER OF INTERNET SUBSCRIBERS INCREASING AT A FAST
PACE
 The number of internet subscribers in the country increased at a Visakhapatnam
Internet subscriptions
port traffic (million
(in Million)
tonnes)
CAGR of 45.74 per cent during FY06-19 to reach 665.31 million in
2018-19.
^CAGR 45.74%
 Internet subscriptions in India surpassed the 500-million mark by the 700
end of June 2018.

665.31
 The number of internet subscribers in the country is expected to 600
double by 2021 to 829 million#. Overall IP traffic is expected to grow
4-fold at a CAGR of 30 per cent by 2021.
500

493.96
 As of 2019, India holds the world’s highest data usage per
smartphone at an average of 9.8GB per month. It is expected to
400

422.19
double to 18GB by 2024

342.65
300

302.35
164.81

251.59
200

100

22.86
19.67
16.18
13.54
11.09
9.27
0
FY07

FY08

FY09

FY16

FY18

FY19
FY10

FY12

FY13

FY14

FY15

FY17
FY11
Note: CAGR - Compound Annual Growth Rate; BSNL - Bharat Sanchar Nigam Ltd, IP – Internet Protocol, ^CAGR is up to FY18, #as per CISCO,
Source: Telecom Regulatory Authority of India, Business Monitor International

18 Telecommunication For updated information, please visit www.ibef.org

 EXPONENTIAL GROWTH IN DATA
CONSUMPTION
 India holds the distinction of being the largest consumer of mobile Visakhapatnam
Total Wireless Data
port traffic
Usage(million
(in Terabytes)
tonnes)
data globally.
 Data consumption in the country has witnessed exponential growth
over the course of the past few years. 18,000,000

 Total wireless data usage in India grew 119.00 per cent year-on-year
16,000,000
to 1,58,50,560 terabytes between January-March 2019.

15,850,560
14,000,000

14,253,256
12,000,000

12,549,891
10,000,000

10,418,076
8,000,000

8,067,633
6,000,000

6,521,893
5,430,046
4,000,000

4,206,415
2,000,000

Q1 FY18

Q2 FY18

Q3 FY18

Q4 FY18

Q1 FY19

Q2 FY19

Q3 FY19

Q4 FY19
Note: CAGR - Compound Annual Growth Rate
Source: Telecom Regulatory Authority of India, Lok Sabha

19 Telecommunication For updated information, please visit www.ibef.org

 SURGING TELECOM REVENUES
 Indian telecom sector’s gross revenue grew from US$ 32.05 billion in Telecom Sector
Visakhapatnam
Gross Revenue
port traffic
(US$(million
billion)(as
tonnes)
of Dec 2018)
FY08 to US$ 33.97 billion in FY19.
 Gross revenue of the telecom sector stood at Rs 237,416.6 crore
(US$ 33.97 billion) in 2018-19. 45

 Indian telecom sector’s revenue is expected to grow by 7 per cent in 40

41.69

41.69

40.93
FY20 backed by stabilizing tariff wars and increased spending by

40.29

39.49
39.14

38.79
subscribers due to minimum recharge plans.

37.64
35

33.97
33.32
33.02
30

32.05
25

20

15

10

FY10

FY13

FY14

FY17

FY18
FY08

FY09

FY12

FY15

FY16

FY19
Note: CAGR - Compound Annual Growth Rate, FY – Indian Financial Year (April – March) FY11
Source: Telecom Regulatory Authority of India’s Performance Indicator Report, TechSci Research , Crisil

20 Telecommunication For updated information, please visit www.ibef.org

 EMERGENCE OF TOWER INDUSTRY
 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 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
Emergence of Tower Industry

Focus on Segregation
Higher tower of towers
Rising operating sharing to into
competition cost and reduce separate
debt burden costs companies

Source: TechSci Research

21 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

RECENT TRENDS AND STRATEGIES

 NOTABLE TRENDS IN THE INDIAN TELECOM
SECTOR
 The green telecom concept is aimed at reducing carbon footprint of the telecom industry through lower energy

Green Telecom
consumption
… (1/2)
 The Government of India’s National Digital Communication Policy, released in September 2018, envisages
strengthening of mobile tower industry by promoting and incentivising deployment of solar and green energy
for telecom towers.
 The Government of India proposed a joint task force between Ministry of New and Renewable Energy
(MNRE) and Department of Telecommunication to promote green technology in the sector.

 There are over 62,443 uncovered villages in India; these would be provided with village telephone facility with
subsidy support from the government’s Universal Service Obligation Fund (thereby increasing rural tele-
Expansion to Rural density)
Markets
 As of July 2019, the rural subscriber base accounted for 42 per cent of the total subscriber base, thereby
fuelling growth across the sector

 The most significant recent developments in wireless communication include BWA technologies such as
WiMAX and LTE
Emergence of BWA  In March 2018, Bharti Airtel its VoLTE services in Kolkata while Vodafone launched VoLTE services in Jaipur
and Jodhpur.
Technologies
 As of June 2018, BSNL is expected to launch its 5G services by 2020.
 India is expected to be the second largest market in 5G services followed by China in the next 10 years.

 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 development of those cities.
Internet Of Things (IOT)
 Reliance Jio has partnered with Samsung Electronics to set up a nationwide Internet of Things (IoT) network
 As of August 2019, Jio's IoT platform is ready to be commercially available from January 2020
Notes: BWA - Broadband Wireless Access, TRAI - Telecom Regulatory Authority of India
Source: TechSci Research

23 Telecommunication For updated information, please visit www.ibef.org

 NOTABLE TRENDS IN THE INDIAN TELECOM
SECTOR
 Vodafone India and Idea have merged into Vodafone idea. Vodafone Idea is unifying assets and aims to
complete network integration by June 2020.
Consolidation  Airtel’s acquisition of Tata Teleservices’ mobile business was given approval by Competition Commission of
India (CCI) in November 2017. As of December 2018, the deal was cleared by the National Company Law
Tribunal (NCLT).

 In 2017, Vodafone disclosed its plans to invest US$1,310 million to upgrade and expand Vodafone India
network coverage and US$ 655 million to upgrade its technology centre
Rising investments
 The new National Digital Communications Policy 2018 has envisaged attracting investments worth US$ 100
billion in the telecommunications sector by 2022.

Outsourcing non-core  As part of the recent outsourcing trend, operators have outsourced functions such as network maintenance, IT
activities operations and customer service

 Department of Posts launched mobile banking for its saving account customers.

 The number of mobile wallet transaction increased 5 per cent month-on-month to 325.28 million in July 2018.
Mobile banking  In March 2017, the government set a target of achieving 25 billion digital transactions for banks with the help
of PoS machines, transactions enabled and merchants, which have been added in firms
 As of August 2019, more than 503 banks have been permitted to provide mobile banking services in India.

 Reliance Jio Infocomm is going to expand its optical fibre network to over 1,100 cities under its JioGigaFiber
Investments in optical brand. In August 2019, commercially launched Jio GigaFiber as wired broadband service.
fibre network  In January 2019, Himachal Futuristic Communications Ltd (HFCL) decided to expand its optical fibre cable
(OFC) manufacturing capacity to 10.5 million fkm from 7 million fkm.
Notes: FKM – Fibre Kilometre
Source: ’Searching for New Frontiers of growth: Indian Banks’- PwC, TechSci Research , Reserve Bank of India

24 Telecommunication For updated information, please visit www.ibef.org

 STRATEGIES ADOPTED

 Players are using innovative marketing strategies to succeed in this sector. For example,
• Vodafone Idea launched #StrongerEveryHour with aim to highlight the improved network of Vodafone
Marketing strategy
SuperNet 4G - India’s Data Strong Network.
• Airtel launched new ad campaign ‘Sab Kuch Try Karo, Fir Sahi Chuno’

 Players differentiate themselves by providing different services to customers.

Differentiation  Bharti Airtel has already partnered with Amazon Prime and Hotstar and is expected to tie up with Netflix to
offer free subscription to Netflix’s content on its mobile customers.

 Players have reduced the number of plans on offer and now offer a limited number of simple tariff plans
Reduced number of along with marquee plans.
plans
 This has simplified choosing plans for customers and customers can choose the best deals for themselves.

 Players price their products very carefully due to the price sensitive nature of customers and high competition
Pricing strategy
in the sector.

Notes: CDMA – Code Division Multiple Access, GSM - Global System for Mobile Communication
Source: Company websites, TechSci Research

25 Telecommunication For updated information, please visit www.ibef.org

 KEY COMPANIES IN THE MARKET

Company Ownership Presence

Government (56.3 per cent), Life Fixed-line and mobile telephony (in
Mahanagar Telephone Nigam Ltd (MTNL)
Insurance Corporation (18.8 per cent) 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 per cent)
Internet in 22 circles

Bharti Group (45.48 per cent), Pastel

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

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

Vodafone Idea Limited
Group partnership 22 circles

Reliance Jio Infocomm Reliance Industries Limited. Broadband and mobile

Source: Companies’ websites, Moneycontrol

26 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

GROWTH DRIVERS
 SECTOR BENEFITS FROM RISING INCOME,
GROWING YOUNG POPULATION
Increasing
Growing demand Policy support
investments

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

Inviting Resulting in

Growing young Relaxed Increasing M and

population FDI Norms A activity

Encourages
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

28 Telecommunication For updated information, please visit www.ibef.org

 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%^

3,500 209.10 266.50 267 271.5 304.80

100%
44.0% 31.0% 30.7% 27.6% 18.0%
90%

3,273.85
3,000

3,006.54
80%
46.0%

2,762.31
2,500 70%
46.0%

2,538.82
45.0% 45.3%
60%

2,334.14
2,000 2,134.75
50% 42.0%
1,982.70

40%
1,749.16

1,500
1,638.76
1,610.36

30% 20.0%
1,485.60
1,481.56

1,000 20% 16.2%

15.0% 15.0%
10% 8.0% 11.0%
500 3.0% 1.5% 6.0% 6.4% 7.3%
0% 2.0% 2.6% 2.9% 5.0%
2005 2016 2017 2018 2025F
0 Elite(>US$ 30800) Affluent(US$ 15400-30800)
2012

2017

2018

2019

2020

2021
2013

2014

2015

2016

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 is expected to grow at a CAGR of 7.47 per cent 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 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

29 Telecommunication For updated information, please visit www.ibef.org

 STRONG POLICY SUPPORT CRUCIAL TO THE
SECTOR’S DEVELOPMENT … (1/3)

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

 In 2015, Telecom Regulatory Authority of India made regulations to amend the Standards of quality of wireline
Standards of quality
(telephone service) and cellular mobile telephone services. These regulations has been laid down to ensure
wireline and wireless
better and effective compliance with the quality of service regulations and to protect the interest of the
services customers

 FDI cap in the telecom sector has been increased to 100 per cent from 74 per cent; out of 100 per cent, 49
Relaxed per cent will be done through automatic route and the rest will be done through the FIPB approval route
FDI norms  FDI of up to 100 per cent is permitted for infrastructure providers offering dark fibre, electronic mail and voice
mail

 In May 2017, Microsoft India signed a Memorandum of Understanding with the Telecom Sector Skill Council
(TSSC) to encourage skill development through “Project Sangam”.
 In a major push for Prime Minister Narendra Modi's 'Skill India' mission, Microsoft's Indian-born CEO Satya
Skill Development
Nadella launched a Cloud hosted platform named as "Project Sangam" to help the government not only train
but also assist people get jobs via professional networking website LinkedIn, which was acquired by the
company last year.

Notes: FDI - Foreign Direct Investment, FIPB - Foreign Investment Promotion Boar
Source: TRAI, TechSci Research

30 Telecommunication For updated information, please visit www.ibef.org

 STRONG POLICY SUPPORT CRUCIAL TO
THE SECTOR’S DEVELOPMENT … (2/3)
 In February 2018, TRAI passed the Telecommunication Tariff (63rd amendment) order, according to which,
Telecommunication
telecom firms are free to give promotional offers to customers if the offers are transparent, non-predatory and
Tariff Order
non-discriminatory.

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

 In January 2015, the Government of India recommended reduction in license fees of telecom operators by 6
Reduction in license per cent, telecom operators currently pay 8 per cent of adjusted gross revenue as licence fee
fees  The issuance of several international and national long-distance licenses has created opportunities and
attracted new companies into the market

 The Government of India has announced the Phased Manufacturing Programme (PMP) to promote domestic
Make in India production of mobile handsets. This initiative will help in building a robust indigenous mobile manufacturing
ecosystem in India and incentivise large scale manufacturing.

Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable, WiMAX - Worldwide Interoperability for Microwave Access Telecommunications
Source: TRAI, TechSci Research

31 Telecommunication For updated information, please visit www.ibef.org

 STRONG POLICY SUPPORT CRUCIAL TO THE SECTOR’S
DEVELOPMENT … (3/3)

 The USOF is expected to extend financial support to operators providing services in rural areas and
Financial support
encourage active infrastructure sharing among operators

 The prescribed limit on spectrum would be increased from 6.2MHz to 2x8 MHz (paired spectrum) for GSM
technology in all areas other than Delhi and Mumbai, where it will be 2x10MHz (paired spectrum)

Enhanced spectrum limit  Telecom players can, however, obtain additional frequency; there will be an auction of spectrum subject to
the limits prescribed for the merger of licenses
 In January 2018, the government revised cap on spectrum holding from 25 per cent to 35 per cent.

Telecommunication  In 2015, telecom authority issued this order mandating every DTH operator to specify the tariff for supply and
amendment order for installation of the customer premises equipment. DTH operator should specify the refundable security deposit,
installation charges, monthly rental charge and activation.
broadcasting and cable
services  As of July 2019, India achieved 100 per cent digitisation of cable TV network.

 In October 2018, India held the second edition of the Indian Mobile Congress. The conference brought
together more than 5,000 delegates and 50,000 visitors.
Indian Mobile Congress
 Global and local industry leaders such as Samsung, Intel, Ericsson, Nokia, Airtel, Reliance Jio and Vodafone
participated in the event, apart from others.

Notes: USOF - Universal Service Obligation Fund; OFC - Optical Fibre Cable
Source: TRAI, TechSci Research

32 Telecommunication For updated information, please visit www.ibef.org

 NATIONAL DIGITAL COMMUNICATIONS POLICY - 2018

National Digital
Communications Policy,
2018

Connect India Propel India Secure India

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

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

33 Telecommunication For updated information, please visit www.ibef.org

 FOREIGN INVESTMENTS FLOWING IN … (1/2)

 FDI inflows into the telecom sector during April 2000-July 2019 FDI inflows in telecommunication in April 2000-July 2019 (US$
Visakhapatnam port traffic (million tonnes)
totalled to US$ 37.05 billion. billion)

 During this period, FDI into the sector accounted for a share of nearly 35.00
7.93 per cent of total FDI inflows into the country. 2.66 37.05
6.21
30.00

25.00 5.56

20.00
1.32
2.90

15.00 1.31
0.30
1.96
10.59
10.00

5.00

2012-13

2013-14

2015-16

2016-17

2017-18

2018-19
2014-15

FY01-FY19
2011-12
FY01-FY11

Source: Department for Promotion of Industry and Internal Trade (DPIIT)

34 Telecommunication For updated information, please visit www.ibef.org

 FOREIGN INVESTMENTS FLOWING IN …
(2/2)
 Vodafone India and Idea Cellular have 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

Increase in stake to 48.90 per

Bharti Airtel Singtel (as of February 2019) 367.15
cent

Increase in stake to 48.90 per

Bharti Airtel Singtel (2018) 411.02
cent

Ascend Telecom
IDFC Alternatives (2017) 54.29 33 per cent stake
Infrastructure Pvt. Ltd.

Telenor Bharti Airtel (2017) N/A Infrastructure and Contracts

Bharti Airtel's operations in

Orange SA (2016) 900 100 per cent stake
Burkina Faso and Sierra Leone

MTS Reliance Communication (2015) 736.98 8 – 10 per cent stake

Augere Wireless Bharti Airtel (2015) 21.3 100 per cent stake

Increases stakes to 32.34 per

Bharti Airtel SingTel(2013) 302
cent

Bharti Airtel Qatar Foundation Endowment(2014) 1,260 PE deal – 5 per cent stake

Vodafone International Holdings

Vodafone India Ltd 1,641 Increases stakes to 100 per cent
(2014)

Ascend Telecom Ascend Telecom Infrastructure Pvt Ltd 54.29 33 per cent stake

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

Source: Thomson Banker, Deal Tracker, Grant Thornton, TechSci Research

35 Telecommunication For updated information, please visit www.ibef.org

 Telecommunication

OPPORTUNITIES
 OPPORTUNITIES ACROSS SEGMENTS IN
THE INDUSTRY … (1/2)
Increasing mobile subscribers Untapped rural markets Rising internet penetration

 India’s mobile subscriber base is  By July 2019, rural tele-density  Internet penetration is expected to
expected to reach 1,420 million by reached 56.98 per cent, growing from grow steadily and is likely to be
2024 from 1,200 million in 2018, with 43.05 per cent as of March 2016 bolstered by government policy
80 per cent users having 4G
 Rural wireless tele-density in the  Number of broadband subscribers
connections.^
country increased to 56.98 per cent by reached 604.12 million at the end of
 As of January 2019, Airtel becomes July 2019 from 50.88 per cent as of July 2019.
the first operator to launch high speed March 2016.
 To encourage cash economy, Indian
data service, i.e 4G in group of islands
government announced to provide free
like Andaman and Nicobar.
Wi-fi to more than 1,000
gram panchayats.

Note: ^Ericsson Mobility Report November 2018

Source: KPMG, TRAI, TechSci Research

37 Telecommunication For updated information, please visit www.ibef.org

 OPPORTUNITIES ACROSS SEGMENTS IN THE
INDUSTRY … (2/2)
Development of telecom Growth in MVAS and cloud Growing Cashless
Telecom equipment market
infrastructure computing Transactions
 TRAI has made several  The Indian Mobile Value-  Telecom equipment market  In order to overcome the
recommendations for the Added Services (MVAS) is expected to reach US$ 30 cash related problems being
development of telecom industry is expected to row billion by 2020. faced by people, due to
infrastructure, including tax at a CAGR of 18.3 per cent demonetisation, Paytm
 In October 2018, telecom
benefits and recognising during the forecast period launched a service through
equipment producers
telecom infrastructure as 2015–2020 and reach US$ which consumers
committed over Rs 4,000
essential infrastructure 23.8 billion by 2020. and
merchants can pay and
crore (US$ 554 million)
receive instantly,
worth of investments at the
money without internet
Indian Mobile Congress.
an
 Further, in October 2018, connection
 This has enabled non-
Swedish communications
smartphone users to go
major Ericsson commenced
cashless.
exports of 5G-ready
telecom equipment from the  Value of Unified Payments
country. Interface (UPI) transactions
grew to more than Rs
161,456.56 crore (US$ 955
million) in September 2019.

Notes: VAS - Value-Added Services, NTP - National Telecom Policy, * - as per IDC, ^ - as per Electronics Industry Associations
Source: Press Information Bureau, Government of India, TechSci Research

38 Telecommunication For updated information, please visit www.ibef.org

 MOBILE APPLICATION MARKET: FAST
GROWING SEGMENT
 In 2017, India surpassed USA to become the second largest market Visakhapatnam
App downloads^
port in
traffic
India(million
(in billions)
tonnes)
in terms of number of app downloads.
 App downloads in the country increased from 6.51 billion in 2016 to
12.07 billion in 2017. 40.00

 Moreover, during the first quarter of 2018, India became the world’s

37.20
35.00
fastest-growing market for mobile applications. The country remained
as the world’s fastest growing market for Google Play downloads in
30.00
the second and third quarter of 2018.
 App downloads in India are expected to increase to 18.11 billion in 25.00
2018F and 37.21 billion in 2022F.
 The segment’s growth is expected to be driven by increasing mobile 20.00
connections and availability of low-range smartphones

18.11
15.00
 Over 100 million apps are downloaded every month across different
platforms such as iOS, Blackberry, Nokia and Android

12.07
10.00
 As of January 2019, India has witnessed a 165 per cent growth in
app downloads in the past two years. 5.00

6.51
 4.8 billion downloads of mobile applications was registered in India in
three months of 2019 at the end of March 2019. 0.00

2017
2016

2018F

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

39 Telecommunication For updated information, please visit www.ibef.org

 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

 INR: 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 Telecommunication For updated information, please visit www.ibef.org

 INDUSTRY ORGANISATIONS

Association of Unified Telecom Service Providers of India

Association of Competitive Telecom Operators (ACTO)
(AUSPI)

Address: B-601, Gauri Sadan 5, Hailey Road, New Delhi – 110 001, Address: 601, Nirmal Tower, 26, Barakhamba Road, Connaught Place,
India New Delhi – 110 001, India
Tel: 91 11 23358585 Tel.: 91 11 43565353 / 43575353
Fax: 91 11 23327397 Fax: 91 11 43515353
Website: http://www.auspi.in/ E-mail: [email protected]
Website: www.acto.in

Internet and Mobile Association of India (IAMAI) Cellular Operators Association of India

Address: F-36, Basement, East of Kailash, New Delhi – 110 065, India Address: 14, Bhai Vir Singh Marg, Sector 4, Gole Market, New Delhi –
Tel: 91 11 46570328 110001, India
E-mail: [email protected] Tel: 91 11 2334 9275
Website: www.iamai.in E-mail:
[email protected]
Website: www.coai.com

35 Telecommunication For updated information, please visit www.ibef.org

INDIAN TELECOM REGULATORY FRAMEWORK
 REGULATORY FRAMEWORK:

The Department of telecommunications (Government of India) is the main governing body for the industry.

Telephone Regulatory Authority of India (TRAI) assists the Government of India (GoI) to take timely decisions and
introduce new technologies in the country.
Functions of Telecom Organizations:

Dept. of Telecom: Policies & Licensing

Telecom Engineering Centre Standardisation,Technology Management &

Interaction with players etc.
(TEC):

Centre for Development of R& D

Telematics (C-DOT):

Telecom Dispute Settlement &

Dispute Settlement.
Appellate Tribunal :

Telecom Consultants of India Ltd : Project Execution & Consultancy.

Telecom Regulatory Authority of Regulation to facilitate competition & technology
India(TRAI) : development.

Concerns:
 Advent of 4G
 Licensing and sale of spectrum
 Below cost pricing and industry profitability
 Managing competition
 Security
 Managing M&A