India's Telco Milieu – It's About Millions Now

Inhaltsverzeichnis

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There is a scene in a series on time travel called Dr. Who. This time traveller visits the 19th century painter Vincent Van Gogh and takes him on a spin to the future. They land in an art gallery, where Van Gogh’s eyes tear up, and his throat chokes with unutterable emotions. That's when he sees what his paintings have become. If some Dr. Who had visited India in the 1980s or early 1990s, and had taken an average Indian on a similar ride to the future called 'today', that person would have been as overwhelmed, as shocked, and as ecstatic as Van Gogh was.

Because, believe it or not, back then, an average Indian user could not just pick up a receiver to talk to someone in another city. One had to book a trunk call. The person, surrounded by all family members, would wait for hours until the operator connected the call. Even getting a phone installed was an ordeal that involved truckloads of patience, red tape, and fate. A street was lucky to even have one house with a landline connection. Neighbours used the same phone to make or receive calls. Telephony was nothing short of a fire-side then. It gathered people.

Fast-forward to today: Since 2021, India is the second largest telecommunications market by users with over a billion subscribers. Now, everyone has that shiny, slim thing in a pocket. People watch Netflix, shop online, book instant cabs, order pizzas, plant crops smartly and even create their own livelihoods through this genie. Mind you, these are not just people sitting in some lush bungalow or a fancy cafe in a big city. There's a coconut seller using an online payment app, a 60 year old home-maker starting a cloud kitchen, a villager tracking his cattle through RFID, and many hospitals running tele-consultations for patients in far-off corners. Telephony in India is touching and empowering the common Indian. It’s like a time leap. What changed, where, and how?

From Noah’s Ark to Three Men in a Boat

Until the big pivot called liberalisation in 1991, government-run companies BSNL and MTNL ran the telco sector – mainly landlines and payphones. But as reforms burst into full blossom, private operators of all stripes entered the market. With the setting up of TRAI (Telecom Regulatory Authority of India) in 1997, the government loosened its grip on decisions of tariffs and policymaking.

The market was now open to companies like Reliance Communications, Tata Indicom, Hutch, Vodafone, Airtel, Idea, Loop Mobile, and Spice. Limits on foreign investment were also increasingly relaxed. With more players, competition shot up, intensified with the introduction of Mobile Nimber Portability in 2011. And just a few years back, around 2016, Jio flipped the business model with jaw-droppingly cheap plans. Suddenly, data became the new revenue source.

The ARPU (Average Revenue per User) mathematics changed. And so did affordability. Now almost everyone could do more with a phone than just make or receive calls. This fillip was given tailwind when the Indian government declared the majority of cash in circulation worthless. At that point, the average Indian became comfortable with mobile payments. Prime minister Narendra Modi's policies and programmes for "Make-in-India" and "Bridging the Digital Divide" turned out to be just the war-cry the country needed to buckle up and dream big. Manufacturing and availability of devices of all size-and-price brackets became ample and strong.

The second big shake-up happened with a wave of consolidation. Sourav Gupta, Telecom Analyst at Omdia, explains: "India witnessed the major merger between Idea Cellular and Vodafone in 2018. Free services from Jio (such as free subscriptions to online services) started a price war, as India had/has an oligopoly market. Also, Reliance Communication (R Com) merged with Aircel and acquired MTC. Tata Telecom also started the process of merging with R Com. As a result, in a period of seven months, several mergers and acquisitions lowered the number of operators operating in the market." The price war lasted until 2019.

After The Storm

The battlefield left the last few men standing. Market share today leans heavily towards private operators (90%), while publicly owned operators occupy just ten percent. Tele-density is at a healthy level with 85 telecommunications-subscriptions per 100 Indians: There are almost 83 active SIM-cards and just under two wireline connections per 100 people in India. The official statistics for the end of 2022, however, still show a marked difference between urban and rural subscribers: In the cities, one finds 129 active SIM-cards per 100 inhabitants and more than five landlines. In the countryside, 100 dwellers share about 57 SIM-card among them, but just 0.23 landlines. In addition, over 68,000 villages have Village Public Telephones – out of more than 640,000 inhabited villages (according to the 2011 census). A recent report from the regulatory authority TRAI shows gross revenue for India's telecom sector for the fourth quarter of 2022 at about 9,9 billion Euro.

No wireless operator is licensed to operate in all 22 license areas. Users who travel outside their operators coverage area incur national roaming fees for calls and texts, but these fees have become minimal. There are no additional fees for data roaming within India.

Also, both the federal government of India and local governments have spent billions on subsidies to increase production (and exports) of telecommunications equipment and other electronics. These subsidies have worked, especially at a time when China was dealing with pandemic-spurred supply-chain issues.

Device Exports Doubled

As per latest data from India's commerce ministry, India's smartphone exports have almost doubled to $10.9 billion during the year. Apple has its own store in India now, and also plans to expand its manufacturing to produce a quarter of all iPhones by 2025 in India. Google has ordered Pixel-smartphones from India as well. More than that, what counts is that affordability and use of telecommunications are at their best-ever level now – and far ahead of many other countries.

For the quarter ending June 2021, the average price for an outgoing voice call was 4 Paise per minute. 100 Paise are 1 Rupee, and about 90 Rupees convert to 1 Euro. In other words, you could call someone for 23 minutes for a single Eurocent. Outgoing SMS cost 1 Paisa on average. The average revenue per gigabyte for wireless data stood at 10 Rupees, as per a recent estimate. According to Opensignal’s April 2023 Mobile Experience Network Report, the Jio mobile network takes the crown with average download bandwidth of 22.5 Mbps, and average 5G download of 315 Mbps. 5G was launched in October 2022 and reached ten million users by year end. For upload speeds, Vodafone India and Airtel (5G) lead the pack. So all’s happy – with no jitters?