GSMA predictions on India telecom revenue, Capex, 4G and 5G

4G forecast for India
GSMA today said Indian telecom operators’ Capex (capital expenditure) will decline to $5.9 billion in 2020 from $7.7 billion in 2016.

The total revenue of mobile operators in India will just increase by $1 billion to $31 billion in 2020 from $30 billion in 2016.

India’s mobile user penetration will increase to 64 percent in 2020 from 51 percent in 2016, according to GSMA.

Smartphone penetration will grow from 28 percent in 2016 to 50 percent in 2020.
India telecom Capex forecast by GSMA
4G saw sluggish growth in India following its initial launch in 2012, hindered in part by the lack of affordable, harmonised spectrum in the sub-1 GHz coverage bands.

However, the commercial launch of services by Reliance Jio in September 2016 and investments by the existing operators have driven rapid growth in 4G connections. The 4G connection base is forecast to grow to 270 million by 2020. By then, mobile broadband (3G and 4G) will account for almost 50 percent of total connections.
Mobile operator revenue in India
Reliance Jio launched its operations in the market by offering free services for six months. This led to significant pressure on market pricing and revenues. Data ARPU levels fell to $1.88 in Q1 2017 from $2.33 12 months earlier. In Q4 2016 total revenues in India declined for the first time by 1 percent annually, compared to annual growth of more than 6 percent for the three quarters previously.

Emerging markets are driving growth: India, Indonesia and Brazil will represent 35 percent of the 4G increase, underscoring the geographic shift in internet users.

Asia will drive subscriber growth, accounting for 60 percent of new subscribers globally. India will add 162 million mobile subscribers during 2017 – 2020, while China will add 128 million and Africa will add 99 million.

Five markets will account for more than 40 percent of the 1.6 billion new smartphone connections by 2020. Lower cost smartphones from local manufacturers such as Huawei, Oppo, OnePlus and Xiaomi in China, Micromax in India, and now AfriOne in Nigeria, are helping to address the affordability barrier.

Almost 1 billion more people will start using their mobiles to access the internet by 2020. By this time, five-sixths of phone owners globally will be mobile internet subscribers. Asia Pacific will account for more than half of this growth, mostly in India and China. However, as a proportion of population, Africa will grow the fastest.

The digital divide is greatest in India and Sub-Saharan Africa. India and Sub-Saharan Africa account for 42 percent of the world’s unconnected, with more than 60 percent of their respective populations not yet on the internet.

In India, 820 million people do not have any internet connection at present.

Developing countries have been more focussed on 3G rollout. 4G coverage is on average 35 percent. However, there are two notable exceptions: China has achieved 99 percent coverage in less than three years and is now 4G-first. India has gone even faster, with a disruptive new entrant Jio forcing big competitors to follow suit. Europe has proven to be an LTE laggard, although the EC is intent on reasserting continental leadership in 5G.

India 4G is an anomaly; coverage is out of sync with consumer demand. With operators only able to reduce pricing so much in an already competitive market, the risk is that 4G becomes a ‘white elephant’.

The launch of Jio in India in September 2016, offering aggressively priced 4G data services, drove adoption but put significant pressure on market prices and hence revenues.