3G and 4G: Operators to make Rs 4,800 crore in 2012 against Rs 106,336 crore spent on spectrum

Src : hindubusinessline









Telecom Lead India: Indian mobile service providers are likely to generate around Rs 4,800 crore as data revenue from 3G and 4G services in 2012 after buying spectrum for Rs 106,336 crore in 2010.

In 2011, Indian telecom operators’ data revenue from 3G and 4G services was not significant as 3G was just taking off in the country and 4G was not launched.

Recently, Maravedis-Rethink said that active 3G subscriber base in Indian telecom market will reach 41 million by the end of 2012.

Idea Cellular, one of the leading 3G players in India, recently said its 3G data ARPU was Rs 88 in the first quarter of 2012.

Analysts said 3G data ARPU is likely to go up in third and fourth quarters due to increased usage during festival seasons.

For calculation purposes, TelecomLead.com used Rs 100 as monthly 3G data ARPU for operators from their around 4 crore active 3G customers in 2012. Airtel’s 4G revenue is not significant at this point of time.

Airtel is the only operator to launch 4G services – in April 2012 – using TD-LTE technology. Bharti Airtel has achieved 3,180 TD-LTE subscribers through its 4G network in Kolkata and Bangalore. Airtel’s data revenue from 4G is not available.

Besides spending Rs 106,336 crore for 3G and BWA spectrum — over three times the estimated revenue of Rs 35,000 crore, telecom operators such as Aircel, Airtel, BSNL, MTNL, Reliance Communications, Tata Teleservices and Vodafone spent significant funds for rolling out 3G services across the country.

In India, the investment and returns from 3G and 4G are not in line with the expectations of the industry. 3G, when launched in the U.K., badly affected its telecom industry. 3G and 4G scenario in India are not different. Here, we do not have a financially strong British Telecom to write off investments in 3G. All Indian companies are facing financial pressure.

In 2012, several operators will be prompted to look for 2G spectrum as well. This will add significant pressure on the telecom industry in coming years.

Moreover, TD-LTE is yet to see significant investments from operators such as Aircel, Airtel and Reliance Industries-owned Infotel Broadband. The TD-LTE subscriber base in India will reach 67 million by the end of 2017.

2014-15 will be another significant year for the country when FDD-LTE variant will be deployed when 700 MHz spectrum is allocated in late 2014 or early 2015.


In August, Airtel said 3G users of the mobile major Airtel increased to 37,13,000 in Q1 2012-13 from 27,11,000 in Q4 2011-12. The mobile service provider has increased its 3G sites to 18,012 in first quarter of FY 2013 from 10,669 in Q1 FY 2012. Airtel offers offer 3G services in over 1100 towns and cities and as of the end of first quarter, over 5 million active customers on 3G, above which 3.7 are active 3G users. Airtel also has over 18000 around sites equipped with 3G.

Reliance Communications has around 4 million active 3G customers which makes its total data usage customers on the network as 24 million with an average consumption of 240 MB.

According to Reliance Communications, the industry has paid a high price to acquire 3G spectrum, and to roll‐out the 3G network. In addition, the industry is bearing high interest costs, which are impacting the bottom‐line of the operators.

There is a silver lining. Reliance Communications says 2G networks started turning profitable only 8‐10 years after they were rolled out. 3G is barely a one year old story and it is confident that the 3G/data growth story will contribute to future revenues and profits, just as we saw exponential growth in the voice segment of the Indian telecom industry in the past.

Idea Cellular has launched 3G services in 10 service areas, out of 11 service areas where it won 3G spectrum. Idea Cellular has 13,363 3G sites in these service areas till June 2012.

Idea Cellular has around 3.1 million 3G subscribers with average data usage of 375 MB and data ARPU of Rs 88.

Vodafone, BSNL, MTNL and Aircel also made significant investments in 3G.

Indian operators will grow if Indian economy is growing faster and the purchasing power of common people improves. Government needs to step in now. Telecom services reflects the mood of consumers.

Baburajan K
[email protected]