Mobile, broadband subscribers to fuel telecoms sector growth in India

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

Mobile subscriptions and fixed broadband subscribers will continue to fuel the telecoms sector growth in the 2021-26 period. More than 700m people became Internet users over the last in six years and another 600m more Internet users are expected to come online over the next six years by 2026.

Following the market expansion over the last 5 years, sustained revenue growth to 2026 is forecasted, despite the Covid-19 pandemic and the diminishing impact of declining legacy voice and SMS revenue.

Mobile subscriptions are growing faster than mobile service revenue leading to ARPU decline after 3 years of intense competition with the market transitioning to 4G. With a market entry in late 2016, Jio jolted the mobile market from a standing start to becoming the largest mobile operator by the subscriber and third-largest by revenue in just three years.

Reliance Jio launch strategy was to offer three months of free data and free voice, and once that was up, kept the free voice offering permanent while charging only a low price for mobile data (INR50 for 1GB). This strategy is reminiscent to the classic Silicon Valley bet: spend money upfront to acquire customers, then make it up on volume because of a superior cost structure enabled by its 4G only network and the near-zero-marginal cost nature of technology.

Jio’s launch timing was perfect just at the time when competitors had sputtering 4G networks, it offered free Internet to a nation and demographics that could not afford it and increased its addressable market while its competitors were still relying on legacy voice and SMS revenue. Mobile network competitors quickly struggled to compete and a massive wave of consolidation ensued.

The overall telecoms market to grow again through to 2026 after a marked decline from 2017 and 2018 due to a mobile war.
CT Bureau