India telecoms trends in 2017 by PwC’s Arpita Pal Agrawal

India telecom trends in 2017Arpita Pal Agrawal, telecom leader at PwC India, and her team have revealed five trends to watch in India’s telecom sector in 2017.

Data markets

Data realization per MB is expected to decrease by 20–25 percent in 2017. This is primarily due to the launch of Jio free offers.

The Jio pre-launch unleashed a price war on mobile data in India. Consequently, Indian telecoms will experience reduced data realization in 2017 as the increase in data traffic will not compensate for the reduction in data revenues. Telecoms will have no choice but to accelerate the transformation of their delivery model towards a low cost per MB model, leading to large cost-efficiency initiatives and optimization of their 2G / 3G / 4G network.

Investment in fiber

Indian telecom network operators are expected to enhance their investment in fiber networks next year.

Data price reduction, along with a consequent surge in data demand, will accelerate focus on fibre deployment. Poor fiber infrastructure is a bottleneck in providing cheap data services in India. With less than 20 percent of towers fiberised, India has a lot of ground to cover. We forecast the strong acceleration of the fiberisation of networks in 2017.

Cheap VoLTE phones

The Indian smartphone market will witness very affordable LTE- and VoLTE-compliant smartphones in 2017. This is mainly to address the 4G data demand created by operator such as Bharti Airtel, Jio, Idea Cellular, Vodafone India, among others.

With its LYF smartphones, Jio has been a game changer both in terms of reduced price points and LTE and VoLTE compliance across models. We expect that the other players will follow suit and further reduce price points so that LTE and VoLTE become default features. Such smartphones will also have a market demand pull on the back of reduced data prices expected in 2017.

GST

GST-related tax impact on telecoms is expected to be minimal but telecoms to face significant compliance costs in the new GST regime.

Output tax will increase and will be offset to a large extent by input tax credits and supply chain efficiencies. However, GST compliance costs related to multiple state registrations will be a significant burden on telecoms.

Mobile advertising

Mobile advertising will be a key talking point but traditional advertising will continue to get lion’s share.

The industry is predicting 30+ percent growth in mobile Internet users from the existing nearly 370 million user base. A recent survey shows that these users are spending nearly 70 percent of their time online. This finding, coupled with predictions on smartphone growth and lower data charges, indicates that mobile advertising will attract attention. Nevertheless, the traditional advertising media of print and broadcast will continue to dominate, accounting for nearly 90 percent of advertising spends.
India telecom trends in 2017 and wish list

What was PwC India’s prediction in 2016?

# Consolidation towards 5+1 network market

Jio has been an accelerating factor in the consolidation of the Indian market, with announcements related to intra-circle roaming (ICR) agreements, site-sharing agreements and intended exit being indicators of the expected level of sector consolidation.

# Network experience to prevail over customer service experience as selection criteria

Telecoms were uniformly focused on increasing coverage and capacity building of their network.

Data monetisation to shift away from telecoms

2016 saw primarily non-telecoms (OTT players) capturing the lion’s share of customer spend in the areas of m-wallets, e-commerce and mobile entertainment.

OEMs to go up the value chain

Several announcements by OEMs related to customer network usage-based analytics, packet probing and advertisement content-based offerings were made in 2016, but on-ground materialisation is still work in progress.

Enhanced regulator focus and scrutiny on network quality

A lot of regulatory deliberations happened in 2016 on mandating specific call quality parameters, but until now, no mechanism to implement the same has been agreed upon by the regulator and the industry.

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