Indian mobile operators’ investment towards Capex will be $8.1 billion in 2020 as compared with $5.7 billion in 2017, showing a CAGR growth of –11 percent.
The latest GSMA report showing the negative growth in Capex by telecom operators such as Bharti Airtel, BSNL, Vodafone Idea and Reliance Jio will put hurdles on the growth plans of Huawei, Ericsson, Nokia, ZTE, Qualcomm, Intel and Samsung in the Indian telecom market.
The good news is the rapid growth in telecom revenue of Indian mobile operators. Revenue of operators will grow to $30 billion in 2025 from $25 billion in 2017 at a CAGR of 1.9 percent.
The bad news is the slow growth of 5G network. 5G will account for just 4.6 percent of total connections in India in 2025. 4G connections will grow to 63 percent of total connections in 2025 from 21 percent in 2017.
3G connections will grow to 18 percent of total connections in 2025 from 15 percent in 2017. This shows that Indian mobile operators’ huge investment in 3G networks and spectrum did not bring enough returns – primarily due to competition.
India’s 2G connections will drop to 15 percent of total connections in 2025 from 65 percent in 2017.
GSMA says India remains a predominantly 2G market, but this is changing rapidly; the 4G connection base is forecast to grow three-fold to 890 million out to 2025, by which time 4G will account for 6 in 10 connections.
This growth is being fuelled by a combination of falling data prices, better network coverage, improved smartphone affordability and development of locally relevant content.
Smartphone adoption will be 76 percent in 2025 with 1.1 billion smartphones in the hands of Indians as compared with 519 million or 45 percent adoption in 2017.
Unique mobile subscriber base will 919 million with 63 percent penetration from 710 million with 53 percent penetration in 2017 – indicating strong growth potential in the Indian telecom market in coming years.
GSMA says smartphone adoption has led 4G uptake in India and this gap will gradually narrow out to 2025. Smartphone connections are forecast to reach 1.1 billion, accounting for three quarters of the total by 2025.
Despite the 4G era just beginning in India, initial deployments of 5G are expected in 2020, and the government has targeted 2022 for the completion of the 5G rollout. “5G consumer adoption will not significantly impact 4G to begin with, reaching 5 percent of total connections by 2025,” GSMA said.
GSMA said India has experienced a shift in data usage since Reliance Jio’s entry into the market, which led to intense competition and drove down data pricing. Average data consumption per user has risen– by 10× to 4 gigabytes across all wireless generations between 2015 and 2017.
Indian mobile operators’ ARPU has decreased by almost 40 percent since mid-2016, to $1.50. Meanwhile, low data costs have resulted in phenomenal video growth in India. In 2017, online video consumption increased almost five times in the country, while video streaming contributed to 65–70 percent of 4G mobile data traffic.