Entry of Reliance Jio Infocomm in the 4G space is expected to create data battle in India, said CARE Research.
The report said LTE will take some more time to mature in India. 2G, 3G and 4G will co-exist in India for few more years.
Reliance Jio Infocomm is expected to launch its 4G LTE services in September. Currently, the telecom project of billionaire Mukesh Ambani is going through a planning stage.
It is believed that Reliance Jio will play in both data and voice markets threatening the stability of telecom majors.
The entry into the 4G world will pose challenges to established telecoms such as Bharti Airtel, Vodafone, Idea Cellular, Aircel, etc.
3G growth
CARE Research says 3G subscribers grew 80-90 percent in 2013.
After the auction of BWA spectrum in 2300 MHz range in mid-2010, only Bharti Airtel has launched 4G services in India — in a few select cities.
The delay in 4G launches can partially be attributed to regulatory uncertainty, under-developed ecosystem, unavailability of spectrum in the lower frequency range, etc.
After adopting TDD based LTE technologies for the spectrum in 2300 MHz, few Indian 4G players like Reliance Jio and Bharti Airtel are planning to embrace FDD after aggressively buying the spectrum in 1800 MHz in the recent February 2014 auctions. This will reduce ecosystem challenges expanding the device availability from international markets. Also it will facilitate easier international roaming for 4G subscribers, said CARE Research.
The report does not share any forecast on LTE growth or potential in India.
Telecom revenue
CARE Research said revenue for telecom sector would grow at higher single digit over next couple of years, on the back of data led growth and stabilization of mobile ARPU and increase in per minute realization.
In addition, CARE Research said though the active subscriber growth has slowed down from 19 percent in FY12 to 6 percent in FY13 and 9 percent in January 14 (Y/Y), it will continue to grow in single digit, beating the total subscriber base growth, as the composition of active subscribers in the total subscribers would rise to more than 90 percent over next couple of years.
Mobile VAS
Indian mobile VAS will keep growing at double digit, though almost at the half the rate of the historical average.
Consolidation to take off
The report said the M&A activity is expected to gather momentum as witnessed by the recently announced acquisition of Loop Mobile by Bharti Airtel. Considering that the acquirer has to pay market price for the spectrum of the acquired company if the same is obtained through administered mechanism, CARE Research believes that spectrum will no longer be the driver for consolidation.
Indian telecom space would eventually be reduced to 5-6 large players with 1-2 regional players. Over the years, subscriber and revenue market share is slowly being consolidated with the top 3 players and the same is being witnessed in spectrum holding.
