India Telecoms Industry Report - 2023-2030

Executive Summary

India Telecoms Industry Report at a Glance

Globally, the telecommunications sector is proving to be a core and essential infrastructure service to national economies, with data infrastructure becoming critical in a connected world and will likely increasingly attract a new class of investors such as large infrastructure funds. The publisher expects the Indian telecommunications industry to remain steady thanks to the defensiveness nature of the industry, amid the political uncertainties and an uncertain economic outlook due to geopolitics and rising inflation.

Growing mobile phone penetration and emerging fixed broadband take-up among households will fuel future growth over the next five years.

According to our India Telecoms Report, the publisher forecasts that mobile subscriptions and fixed broadband subscribers will continue to fuel the telecoms sector growth in the 2023-30 period. More than 700m people became Internet users over the last six years and another 200m more Internet users are expected to come online over the next six years by 2030.

Market Dynamics and Technological Evolution

The introduction of 4G technology marked a turning point for the Indian telecom market, driving a shift from voice-centric to data-centric services. Mobile data has become integral to digital initiatives and e-governance, underpinning the sector’s growth. However, more needs to be done to increase 4G coverage to the all Indian population with an estimated 1m more mobile towers to cover most of India’s population.

Government initiatives such as ‘Digital India’ aim to create a digitally empowered society, pushing for broader digital payment platforms and broadband accessibility. However, the sector faces challenges like high competition, regulatory uncertainties, and infrastructure issues, particularly in rural areas. Financial stress, highlighted by high debt levels and the complexity of Adjusted Gross Revenue (AGR), adds to these challenges.

The telecommunications industry in India is at a critical juncture, requiring supportive policies, regulatory stability, and continuous investment to overcome these challenges and harness its full potential.

Market Composition and Revenue Trends

The market comprises three major operators with mobile and fixed networks - Bharti Airtel, Reliance Jio, and Vodafone Idea - alongside two state-owned operators and several smaller fixed network operators. The reported market revenue grew from INR 2.6 trillion in 2016 to INR 3.2 trillion in 2022. This growth is attributed mainly to mobile service and fixed broadband revenue expansion. Despite the earlier decline in legacy voice and SMS revenues, market growth is expected to continue steadily towards 2030.

Capital Expenditure and Investment Trends

Capital expenditure (Capex) in the sector has seen dynamic shifts over the years. The overall market Capex decreased from INR 1006 billion in 2016 to INR 970 billion in 2022. Operators like Jio have heavily invested in building out their networks, while others like Vodafone Idea have focused on merger synergies and the elimination of redundant infrastructure. Bharti Airtel, in response to Jio’s aggressive market entry, increased its Capex in 2022 to accelerate its 5G rollout.

Future Prospects and Growth Forecast

The publisher forecasts that mobile subscriptions will grow at an annual average rate of 2% from 2023 to 2030, and fixed broadband subscribers at an average rate of 12.6% over the same period. With nearly 700 million Indian people becoming Internet users in the last six years, and an additional 200 million expected by 2030, the sector is poised for substantial growth. This growth, however, needs to be supported by innovative strategies to enhance industry revenues and profitability while managing the extensive debt burden.

Conclusion

The Indian telecommunications sector stands as a key driver of the country’s socio-economic development. With its vast potential for growth, the industry’s success hinges on its ability to adapt to technological changes, manage financial health, and meet the burgeoning data needs of one of the world’s largest internet user bases. A balanced approach to growth, innovation, and regulatory frameworks will be crucial in shaping the future of telecommunications in India.

According to our benchmark study of mobile data pricing, India has the lowest rate per GB at just a few cents per GB, while Australia and China had the biggest cost reduction per GB mostly due to increased data allowance in plans while Singapore remains expensive.

Broadband Subscribers - FTTH Push and Fixed Wireless

The fixed broadband market is experiencing strong growth mostly driven by the loss of share by the incumbent BSNL, followed by Bharti Airtel, Atria Convergence Technologies (ATC), Reliance Jio, ONEOTT, Excitel, GPTL and Vodafone Idea via its subsidiary You Broadband, all are now investing in full-fibre networks.

However, more competition is expected in the fixed broadband market with Jio’s entry with its residential fibre broadband services disrupting incumbent BSNL but increasing the residential broadband subscriptions significantly.

Fixed broadband penetration is forecasted to grow strongly as India’s investments on full-fibre networks are starting to pay off with affordable packages and increased broadband household penetration growing.

Thematics - Telecoms Infrastructure/5G/M&A/Infrastructure

Infrastructure funds, pension funds and government funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure.

Investment funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure. This report outlines some real market examples of how investors view and value these investments with real industry examples and EV/EBITDA comparatives and benchmarks.

Our India Telecoms Industry Report transactions database analysis highlights the hive of transactions in the India tower market, with the majority of telecommunications operators shifting assets to infrastructure entities and selling down to repay debts and further investments for capacity and coverage of their mobile networks. However, in the short to medium term, the telco sector is likely to experience some corporate activity with the fixed broadband market, now expected to come under pressure with JioFiber’s launch and also broaden the scope of services beyond carriage to content and e-Commerce. The publisher projects strong earnings growth despite the huge debt pile and the looming required 5G and fibre to the home investments by the telecommunications operators. A new wave of M&A, network sharing deals over the next two to three 3 years will continue to consolidate around the large mobile operators, Bharti Airtel, Vodafone Idea and Reliance Jio.

The arrival of 4G moved the Internet off our desktops into our palms and pockets, 5G could transform the network from something we carry around to something taking us around either virtually (augmented reality or virtual reality) or in reality (autonomous vehicles), the 5G outcome and benefits beyond fast connectivity remain largely unknown in terms of business models, investments required and timeline.

Companies Mentioned

• Alliance Broadband
• American Tower Corporation (ATC)
• Asianet Satellite
• Atria Convergence Technologies (ACT)
• Bharat Sanchar Nigam Limited (BSNL)
• Bharti Airtel
• Eutelsat OneWeb
• Excitel
• GPTL
• GTL Infrastructure
• Hathway Cable
• Intech Online
• Kerala Vision
• Mahanagar Telephone Nigam Limited (MTNL)
• Netplus
• ONOTT
• Quadrant
• RaiTtel
• Reliance Communications (RCom)
• Reliance Jio
• Sify
• Starlink
• Tata Communications
• Tata Play Broadband
• Tikona
• Vodafone Idea

Methodology

The publisher uses primary and secondary research as well as proprietary information sources to generate market analysis and forecasts for fixed and mobile services in terms of both subscribers and revenue. Interviews are conducted with key service providers in the region to determine current and potential market sizing as well as future service offerings. Information gathered through interviews is further cross-checked to validate the total market size.

The primary research is supplemented with a range of secondary source material, including related research, press releases, securities filings, media, Web-based materials, and trade publications.

Industry and population statistics are also leveraged for reference and to ensure consistency in the data collection. Extensive service provider primary and secondary research, together with the publisher's end-user research database, provides a strong basis for sizing and forecasting the market. The multiple reference points allow for validation of information provided by the service providers compared with that gathered from alternative sources.

Note: Forecasts are made in local currency, and no allowance is made for inflation. All numbers in this document may not be exact due to rounding.