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Connecting the world

The Indian telecom industry is the second largest in the world with a subscriber base of over 1.1 bn and has registered strong growth in the past 15 years.

The sector has witnessed an exponential growth over the last few years primarily driven by affordable tariffs, wider availability, roll out of Mobile Number Portability (MNP), 3G & 4G, evolving consumption patterns of subscribers and a conducive regulatory environment.

The number of smartphone users in India has crossed the 300 mn mark in 2016, making it the largest smartphone market in the world.

  •   Total number of Subscriber Identity Module (SIM) connections which is currently 1.1 bn is expected to reach 1.4 bn by 2020.
  •   Telecom sector contribution to GDP is expected to reach 8.2% by 2020

 

100% FDI is allowed in telecom sector, of this upto 49% is allowed through the automatic route and beyond 49% under government route
for more details refer FDI Policy 

HIGHLIGHTS

  • Indian mobile industry contributed more than USD 140 bn to India's GDP in 2015
  • Digital India is expected to create USD 1 tn business opportunity by 2020
  • No. of internet users in India is expected to reach 829 mn by 2021

Industry Scenario

The Indian mobile industry is expected to create a total economic value of USD 217.4 bn by 2020.

The telecommunications industry is divided into following subsectors: infrastructure, equipment, Mobile Virtual Network Operators (MNVO), White Space Spectrum, 5G, telephone service providers & broadband.

According to a study by GSMA, smartphones are expected to account for two out of every three mobile connections globally, making India the fourth largest smartphone market by 2020. India is expected to lead in the growth of smartphone adoption globally with an estimated net addition of 350 mn by 2020.

Telecom tower in India is set to boom as its tenancy ration will increase from 1.95 times in 2016 to 2.9 times by 2020 due to the expansion of 3G & 4G and on the onset of 5G technologies.

More than 60 companies have received approval from Department of Telecommunications (DoT) in May 2017 to provide MVNO services; the majority of these companies are focused on Tier 2 & Tier 3 cities.

Growth Drivers

GD
  • Contribution to India's GDP

    6.5%

  • Total employment (2016)

    4 mn (direct & indirect)

  • Rate of market penetration (excluding M2M, as on 2016)

    51.5%

  • No. of smart cities (2017)

    90

Key policies

BharatNet

- For the deeper digital penetration in rural areas, the Government has taken up BharatNet, in mission mode to link each of the 2.5 l Gram Panchayats of India through Broadband optical fibre network. 
- On its completion, BharatNet would facilitate Broadband connectivity (with a 100 Mbps of bandwidth) for over 600 mn rural citizens of the country. 
- This is the largest rural connectivity project of its kind in the world, and is the first pillar of Digital India Programme 

Digital India

- Launched in 2015; aims to empower 1 bn subscribers by providing internet access to all
- The mobile sector plays a key role in meeting the goals of Digital India specifically in the areas of digital payments, BharatNet, eKranti & data analytics for social change

National Digital Communications Policy - 2018 (Draft)

The National Digital Communications Policy, 2018 seeks to unlock the transformative power of digital communications networks - to achieve the goal of digital empowerment and well being of the people of India; and towards this end, attempts to outline a set of goals, initiatives, strategies and intended policy outcomes.

The National Communications Policy aims to accomplish the following Strategic Objectives by 2022:

1. Provisioning of Broadband for All

2. Creating 4 Million additional jobs in the Digital Communications sector

3. Enhancing the contribution of the Digital Communications sector to 8% of India’s GDP from ~ 6% in 2017

4. Propelling India to the Top 50 Nations in the ICT Development Index of ITU from 134 in 2017

5. Enhancing India’s contribution to Global Value Chains

6. Ensuring Digital Sovereignty

Relaxation of FDI Norms

100% FDI is allowed in the telecom sector, of this 49% is allowed through the automatic route.

Spectrum Reforms

Spectrum sharing
- As of 21 April 2016, operators are allowed to pool their respective spectrum holdings for using the whole spectrum block (which was the sum of their respective holdings). 
- This has helped multiply spectrum efficiency many times without the need for additional spectrum

Spectrum Trading
- Spectrum trading enables telecom players to sell their spectrum and exit leading to consolidation in the sector. 
- This has helped reduce the number of service providers from 10 to 8, thereby reducing fragmentation of spectrum. 
- Trading also facilitates ease of doing business 

Spectrum Harmonization
- The harmonisation of spectrum in 800 MHz and 1800 MHz bands was carried out from April to September, 2016 resulting in the rationalisation of spectrum holdings of telecom service providers, and transferring defence holdings to the defence bands. 
- Harmonization of spectrum has helped improve quality of service by making fragmented frequency spots contiguous for efficient utilisation by service providers and making more spectrum available for auction

Spectrum Auction 
- A mega auction of spectrum in 700, 800, 900, 1800, 2100, 2300 & 2500 MHz bands was concluded successfully in October, 2016. 
- Due to the auction, call drops will reduce, service quality will improve, leading to better data speed and enhanced data use through mobile broadband

FDI Facts

  • FDI inflows (USD) in telecommunications during April 2000 - September 2017

  • FDI inflows (USD) in telecommunications during April 2016 - March 2017

  • FDI is allowed in telecom sector (of this upto 49% is allowed through the automatic route and beyond 49% under government route)

  • Share in total FDI inflows into India

Recent Investments

  • May 2017 - Japan NEC to invest USD 10 mn in a New Centre of Excellence in Noida to develop Big Data and Analytics Solutions.

  • March 2017 - Vodafone and Idea Cellular announced the merger of their operations.

  • February 2017 - Bharti Airtel acquired Telenor's India operations in seven circles to receive 43.5 megahertz (MHz) spectrum in the 1800 MHz band.

  • December 2017 - Reliance Communications Limited (RCom) signed a binding agreement with Brookfield Infrastructure Partners to sell a 51% stake in Reliance Infratel, RCom’s tower unit, for USD 1.65 bn

Major Investors