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User Base For 2G, 3G Shrinking As Upwardly Mobile Take To 4G

The days of plain vanilla mobile services in India appear to be numbered.  The 2G user base, although still in a majority, is dwindling rapidly as consumers get hooked to data, galvanizing 4G customer additions for all the major telcos over the past year. Experts predict that even 3G is expected to fade away, making way for 4G to be the only standard in India in two years.

The 2G subscriber base, which accounted for over 70% of India’s mobile users just over a year ago, shrank to under 58% in November 2018 and analysts expect them to completely disappear by 2021.

In contrast, the combined 4G user base of Vodafone Idea (VIL), Bharti Airtel 0.29 % and Reliance 1.02 % Jio Infocomm jumped almost 85% to 432.5 million on January 1 from a year earlier. Mukesh Ambani-led Jio, which only has 4G users, reported a 75% jump in customer base at 280.1 million, accounting for about 65% of the total.

VIL’s and Airtel’s 2G user base shrank 11% and 22.5% to 279.3 million and 176.71 million, respectively, in this period.

This was driven by a blend of falling 4G smartphone prices, dirt cheap data rates and the continuing popularity of Jio’s cheap VoLTE feature phone called JioPhone, which is inducing droves of folks at the lower end of the mobile turf to embrace fast broadband and go 4G, analysts and experts said

“We estimate India’s entire mobile population to go 4G in two years, given the wealth of affordable smartphones in the market coupled with the fact that data rates at a GB a day for $1.4 (Rs 100) are perhaps the cheapest anywhere in the world, a scenario also complimented by availability of rich online content,” Nitin Soni, director (corporates) at global rating company Fitch.

Analysts said a key conversion driver is the latent need of consumers – even from the lowest strata of society – for data, as revealed by the runaway success of JioPhone across rural India, which hastened the depletion of voice-only customers.

The increasing inflow of 4G smartphones amid the steady fadeout of pure 3G devices and the inability to replicate a 4G-grade video experience on 3G has also driven the upgrade, ex-Bharti Airtel CEO Sanjay Kapoor said.

India’s mobile broadband subscribers (comprising 3G and 4G users) accounted for 42.2% of the total in November 2018 from 28.6% in November 2017, according to data from the regulator.

This implies “the national 2G user base has effectively shrunk from 71.4% of the total mobile subscriber base to 57.8% during this period,” said Sanjesh Jain, a telecom research analyst at ICICI Securities.

Company data reveals that 3G customer additions for VIL and Airtel are drying up, with 4G users making up about 70% and 72% of their mobile broadband users, respectively, in the quarter ended December.

Refarming of airwaves by VIL and Airtel to move their 2G/3G users to 4G is further proof of their unalloyed focus on accelerating 4G user additions to fight Jio, analysts said.

Rajiv Sharma, co-head of research at SBICap Securities, said channel checks confirm that the two operators “are hardly investing in their 2G/3G networks.” ―Gadgets Now
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