Deepak Mahajan, Sicap India and APAC’s Executive Director
India is the world’s second largest telecom industry market and is expected to grow by 10% annually to reach USD 103.9 billion by 2020.
2017 saw a trend of consolidation in India’s loss-making telecom industry. We witnessed several mergers among private telecom firms including tier ones, and a merger of two state-owned firms, MTNL and BSNL, is predicted.
Telecommunications is considered to be a universal growth platform in India and has tremendous potential to lift the economy and put the country among the world’s super-powers in the future.
Reliance Jio entered the Indian mobile market in September 2016 with its 4G-only data and Voice over LTE (VoLTE) service. This service was initially free and, then evolved to ultra-cheap service pricing which was combined with 4G handsets to increase Jio’s subscriber base rapidly to 100 million. At the same time, it disrupted the market, triggered the consolidation process and ushered in a data revolution in the country.
Is it déjà-vu for the Indian telecom industry?
When looking at India’s telecom industry status, one cannot help comparing it to the great telecoms crash in Europe and the US in 2002, which was approximately ten times bigger than the better-known dotcom crash and left the telecom firms in total debt of around $1 trillion. The crash caused write-offs and precipitous declines in telecoms share prices globally, in many cases, six-year lows.
The telecom industry recovered from the great crash 15 years ago,and so will the Indian telecom market in 2018.This however requires many corrective actions with profound,long-term renovations to ensure that a sustainable foundation can be established for a future healthy telecom industry in India.
Way forward means consolidation with future technology
A major corrective action which contributed to the eventual recovery from the great telecoms crash in Europe and the US was consolidation. We in India have anticipated this.From 2018, the market is going to have four service providers, Vodafone-Idea, Airtel, Reliance Jio and the soon-to-be-merged BSNL-MTNL.
According to Mr. R. K. Upadhyay, the Director General of Virtual Network Operator Association of India, the Indian MVNO market has the potential to reach a combined revenue of USD 4 billion, which corresponds to a 10% market share of the total USD 37 billion mobile communications market.
There are approximately 60 Mobile Virtual Network Operator (MVNO) licenses granted in India and in 2018, these license holders are likely to tie up with the telcos and focus on serving niche customer segments, while parent companies will battle for the massive mainstream market. This symbiosis will offer the four telcos and the MVNO sector the possibility to efficiently serve all customer segments, optimize customer acquisition and increase customer revenue, and build the foundation for a cohesive telco ecosystem.
Despite India’s immense landmass, the GSM coverage in the country, including 3G and 4G mobile broadband services is relatively solid.In 2010, the 3G and 4G spectrum auctions began and operators have been investing heavily in the licenses each year.The 4G rollouts began in 2015 and now these services are available in multiple cities in all India’s 22 telecom circles. 4G service adoption continues to grow at a constant pace thanks to free or ultra-cheap service rates and the proliferation of low-cost smartphones.
The primary concern for operators in 2018 is how to speed up customer acquisition, migrate users faster to 4G and how to increase the total life-cycle value to maximize the return on investment (ROI) in the spectrum, cellular capacity and network rollouts.
For revenue growth operators will need to speed up the mobile data revolution and offer customers advanced services, bandwidth-intense content, faster speeds and other reasons to upgrade to bigger bundles.
India’s Communications Minister Mr. Manoj Sinha, has stated that the Indian telecom industry is on its way from a voice-centric market to a data-centric market. While the voice business is still the main revenue contributor, data revenues have shown an exponential growth recently. Mobile data traffic grew by 76 percent in India in 2016 and is primarily attributed to the increased smartphone penetration.
Indian operators must tap on real-time device detection and customer engagement automation technologies to speed up the adoption of higher value 4G services in 2018, which can identify for example those subscribers with a combination of 4G capable handset and a non-4G data plan. Customer engagement solutions can deliver these users personalized promotional messages and 4G offers in real-time.
Automated device detection, segmentation and direct customer engagement over-the-air is the only way for Indian operators to capture the fast-moving sales opportunities and increase spending.
The large share of low-cost handsets is a challenge for operators and MVNOs as they are difficult to connect to a network and owners frequently seek for support from the care centres.
In 2018, the most advanced service providers in India will consider accurate device detection data, optimized for the Indian device market, and automated over-the-air device configuration to be critical revenue-generating components for their business and to provide quick, hassle-free mobile data connectivity for their customers.
The under-developed mobile device base in India means that the implementation of value-added services, such as mobile banking and prepaid top-up is costly for service providers.The Unstructured Supplementary Service Data (USSD) enabling technology will still be required in 2018, alongside modern web-technologies to cater for low-end feature-phones and smartphones.
The most urbanized populace will see Internet of Things (IoT) based services such as smart living, connected bicycles and child tracking offered a sour service providers seek to build new high growth segments.
Despite the current situation in India’s telecoms, with a series of well-planned corrective actions and a long-term commitment – 2018 will be the turn-around year for the Indian telecom industry!